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Full text of "National defense migration. Hearings before the Select Committee Investigating National Defense Migration, House of Representatives, Seventy-seventh Congress, first[-second] session, pursuant to H. Res. 113, a resolution to inquire further into the interstate migration of citizens, emphasizing the present and potential consequences of the migraion caused by the national defense program. pt. 11-[34]"

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H. Res. 113 


PART 20 

OCTOBER 28, 29, 1941 

Printed for the use of the Select Coamiittee luvestigating 
National Defense Migration 









H. Res. 113 


PART 20 

OCTOBER 28, 29, 1941 

Printed for the use of the Select Committee Investigating 
National Defense Migration 

fi'«96 WASHINGTON : 1941 


MIGRATION :Ui, 1^ i^f'^'L^ 
JOHN H. TOLAN, California, Chairman 

JOHN J. SPARKMAN, Alabama FRANK C. OSMERS, Jr., New Jersey 

Robert K. Lamb, Staff Director 



List of witnesses ^ 

List of authors J^}1 

Tuesday, October 28, 1941 «ol5 

Testimony of Donald M. Nelson 8015-8UJU 

Statement by Donald M. Nelson 8016 

Testimony of panel of industrial engineers 8033 

Testimony of Morris L. Cooke 8033-80G8 

Statement by Harlow S. Person 8034 

Testimony of Harlow S. Person 8039 

Statement by Morris L. Cooke 8042 

Statement by S. T. Henry 8074 

Testimony of S. T. Henry 8075 

Statement by Alex Taub 8080 

Testimony of Alex Taub 8081 

Exhibits by panel of engineers 809a 

Program for speeding defense effort and reducing unemployment and 
migration, by Morris L. Cooke, S. T. Henry, Harlow S. Person, and 

Alex Taub - 8093 

Employment in metalworking industries and utilization of plant 
facilities, by A. P. Hinrichs, Acting Commissioner, Bureau of Labor 

Statistics, United States Department of Labor 8095 

Wednesday, October 2% 1941 8109 

Statement by Artliur E. Burns 8109 

Testimony of Arthur E. Burns 8123 

Testimony of J. Douglas Brown _ 8133 

Statement by J. Douglas Brown 8151 

Testimony of Eric H. Biddle 8153-8169 

Statement by Eric H. Biddle 8154 

Introduction of exhibits 8176 

Exhibit 1. Retraining and transference in the post-war economy, by 

Dr. Oscar Weigert, American University, Washington, D. C 817T 

Exhibit 2. Use of radio by United States Employment Service, by W. 
L. Mitchell, acting director. Social Securitly Board, Federal Works 

Agency, Washington, D. C 8182 

Exhibit 3. Press release, August 9, 1941, by Labor Division, Office of 

Production Management 8184 

Exhibit 4. Placement, types of jobs, and States of origin in clearances 
through National Youth Administration regional centers, by Aubrey 
Williams, administrator. National Youth Administration, Federal 

Security Agency, Washington, D. C 8185 

Exhibit 5. Labor policies of major auto and supply companies as they 
affect migration, by Victor G. Reuther, assistant coordinator, United 
Automobile Workers, Congress of Industrial Organizations, defense 

employment division 8191 

San Diego Exhibit 29. Survey of Housing and Migration by Consoli- 
dated Aircraft Corporation, San Diego, Calif 8199 

Index I— ^ 8211- 



Washington Hearings, Octobek 28, 29, 1941 


Biddle, Eric H., consultant, American Public Welfare Association, Wash- 

inKton, D. C 8153,8169 

I>ro\vn, J. Douglas, chief, priorities branch, Labor Division, Oflice of 

Pntduction Management, Washington, D. C 8133 

Burns. Arthur E., economic adviser, Work Projects Administration, Fed- 
eral Works Agency, Washington, D. C 8123 

Cooke, Morris L., chairman. Shipbuilding Stabilization Committee, and 
technical consultant. Labor Division, Office of Production Management, 
Washington, D. C 8033, 80«» 

Henry, S. T., assistant to the president, McGraw-Hill Co., New York, N. Y__ 8076 

Nelson, Donald M., executive director. Supply Priorities and Allocation 

Board, Office of Production Management, Washing'^on, D. C 8015-8020 

Person, Dr. Harlow S., consulting economist, Rural Electrification Admin- 
istration, Department of Agriculture, Washington, D. C 8039 

Taub, Alex, technical consultant, Office of Producticm Management, re- 
cently appointed Chief of Conversion Section, Contract Distribution 
Division, Office of Production Management, Washington, D. C 8081 



Of Pkepared Statements and Exhibits 


Biddle, Eric H., consultant, American Public Welfare Association, Wash- 
ington, D. C 8154 

Block, Dr. Herbert, research worker, New School for Social Research, 66 
West Twelfth Street, New York, N. Y 8056 

Brown, J. Douglas, chief, priorities branch, Labor Division, OflBce of 

Production Management, Washington, D. C 8150, 8151 

Burns, Arthur E., economic adviser, Work Projects Administration, Federal 
Works Agency, Washington, D. C 8109 

Consolidated Aircraft Corporation, San Diego, Calif 8199 

Cooke, Morris L., chairman. Shipbuilding Stabilization Committee, and 
technical consultant. Labor Division, Office of Production Management, 
Washington, D. C 8042, 8093 

Employment and Occupational Branch, Bureau of Labor Statistics, De- 
partment of Labor, Washington, D. C 8102 

Henry, S. T., assistant to the president, McGraw-Hill Co., New York, 

N. Y 8074, 8093 

Hinrichs, A. F., acting commissioner, Bureau of Labor Statistics, Depart- 
ment of Labor, Washington, D. C 8095 

Labor Division, Office of Production Management, Washington, D. C__ 8184-8201 

London and Southeastern Regional Board, London, England 8052 

Mitchell, W. L., aetinij executive director, Social Security Board, Federal 
Security Agency, Washington, D. C 8182 

Nelson, Donald M., executive director. Supply Priorities and Allocation 

Board, Office of Production Management, Washington, D. C 8016 

Person, Dr. Harlow S., consulting ecoonmist. Rural Electrification Admin- 
istration, Department of Agriculture, Washington, D. C 8034, 8093 

Reuther, Victor G., assistant coordinator, United Automobile Workers 
Congress of Industrial Organizations, defense employment division, De- 
troit, Mich 8191 

Taub, Alex, technical consultant, Office of Production Management, re- 
cently appointed Chief of Conversion Section, Contract Distribution 
Division, Office of Production Management. Washington, D. C S080, 8093 

United Automobile Workers of America, Congress of Industrial Organi- 
zations, Detroit, Mich 8191 

Weigert, Dr. Oscar, associate professor of comparative social legislation, 
American University, Washington, D. C 8177 

Williams, Aubrey, administrator, National Youth Administration, Federal 

Security Agency, Washington, D. C 8185 




House of Representatives, 
Select Committee Investigating 

National Defense Migration, 

Washington, D. C. 
The committee met at 10 a. m., in room 346, House Office Building, 
Washington, D. C, pursuant to notice, Hon. Jolin H, Tolan (chair- 
man) presiding. 

Present were: Representatives John H. Tolan (chairman), of Cali- 
fornia; John J. Sparkman, of Alabama; Carl T. Curtis, of Nebraska; 
and Richard J, Welch, of California (guest). 

Also present : Dr. Robert K. Lamb, staff director, and Mary Dublin, 
coordinator of hearings. 

The Chairman. The committee will please come to order. The 
first witness will be Mr. Nelson, of the Supply, Priorities, and Alloca- 
tions Board. 


The Chairman. Mr. Nelson, we appreciate very much your coming 
here this morning, as well as your last appearance before this com- 
mittee.^ I wish to repeat to you that we are simply a fact-finding 
body. We do not cross-examine witnesses. 

The committee was appointed a year ago last April for the purpose 
of investigating the interstate migration of destitute citizens. We 
have made our report to Congress on that subject, but in response to 
a persistent demand from many sources throughout the Nation, the 
Congress voted to continue our committee for the purpose of investi- 
gating national defense migration. Our first field hearing since that 
time was held in San Diego, which is one of the "hot spots" of defense 
migration in the United States. The city has had an increase of 
100,000 in population on account of the defense effort. 

Then we came back east to hold hearings in Hartford, Trenton, 
and Baltimore, and recently we conducted an investigation in 

Having read your statement, IVIr. Nelson, 1 can appreciate the 
tremendous responsibility that has been placed upon you in your 
position as executive director of S. P. A. B. Our committee got the 

iMr. Nelson testified before the committee on July 17, 1941, in his then official capacity 
&s director of the Division of Purchases, Office of Production Management. (See pt. 16, 
Washington hearings, July 15, 16, and 17, pp. 6575-6620.) 



imi^ressioii in Detroit that industrial dislocation, and the nnemploy- 
nient and mioration which result from it, could best be alleviated by 
speeding up the defense proorani, so as to utilize all manpower and 
resources, and, of course, in accomplishing this, we shall be achieving 
Gin- primary objective of insuring the safety of our country. 

We are pleased to have you here again, Mr. Nelson. Our witnesses 
today include, in addition to yourself, a panel of very capable indus- 
trial engineers, who will endeavor to indicate from the technical and 
managerial vieAvpoint how defense production can be accelerated and 
dislocations minimized. This panel will include Mr. ISIorris L. Cooke, 
Dr. Henry S. Person, Mr. S. T. Henry, and Mr. Alex Taub. No 
doubt you are acquainted with some of them. 

Mr. Nelson. Yes. sir. 

The Chairman. I should like to add here that the interest of this 
committee in these over-all problems arises from the fact that there is 
today increasing dislocation in American industry, which in turn is 
spreading unemployment and at the same time threatening distress 
migration out of nondefense communities to centers where defense 
production is still expanding. These hearings, in addition to provid- 
ing information for the use of numerous other individuals and 
agencies, enable us to have an informed opinion on which to base 
proposals of new legislation to Congress. We were pleased to learn 
of the agreement between General Motors and the U. A. W.-C. I. O.,^ 
and also of the recent revision of estimates on the convertibility of 
auto production facilities. I also want to say at this time that I 
think the most compelling observation you make in your paper — and 
1 think it is one that will catch the ear of the public — is [reading] : 

One of the basic prdblems therefore is not how to distribute the gains but how 
to distribute the sacrifices and at the same time get the maximum of defense 
and other essential production. 

I think that is a very fine statement. 

Mr. Nelson. That is the root of the matter, Mr. Chairman. 

The Chairman. Mr. Sparkman will now ask you some questions. 

Mr. Sparkman. Mr. Nelson, your prepared statement will go into 
the record as it was presented to us. We have all read it over with 
much interest. 

(The statement referred to above is as follows:) 


I shoiild like to state that I am personally in entire accord with the twofold 
objectives of your committee : first, to offer recommendations for alleviating 
consequent problems, where migration is a necessary corollary to defense activ- 
ity ; and second, to avert all unnecessary migration through minimizing defense 

In previous testimony before you, I have explained in detail my reasons for 
believing that we should do everything practicable, consistent with our defense 
needs, to prevent the immediate and the long-run undesirable results of large, 
unmanageable labor migrations. Among the practicable steps at our disposal 
is the allotment of defense orders to firms located where there are adequate 
supplies of labor. Labor supply is one of the important factors in allotment, 
both of supplies contracts and of construction contracts. But there are other 
factors, such as strategic requirements, supplies of materials, and technological 
conditions, which in many cases outweigh labor considerations and force a 
compromise decision. Then certain limited labor migrations may be necessary. 

1 See Exhibit 5, p. 8192. 


So far as apportioning of defense contracts is concerned, responsibility has 
been given, as you linow, to Mr. Floyd Odium's Contract Distribution Division, 
which works closely with defense contract officials in the military establish- 

Supply, Priorities, and Allocations Board, however, recognizes that labor mi- 
gration may be caused not only by the geographic distribution of defense con- 
tracts, but also by the manner in which businessmen producing noiidefense 
goods make their decisions concerning rate of operations. If output is cur- 
tailed, whether in large plants or small ones, unemployment must follow, ami 
workers will have to look elsewhere for jobs. The ideal situation would be 
that these workers could find new employment close by, either because of a 
growing volume of defense business coming into the locality, or because non- 
defense industries were able to expand output to meet civilian demand. 

All possible efforts should be made to approach this ideal situation. Bat there 
are limiting factors imposed by the nature of the defense program. In the first 
place, there are shortages of a number of materials, with the result that many 
plants face unavoidable curtailment. In the second place, technical matters such 
as the nature of machinery and equipment, the experience of labor and manage- 
ment, the special requirements of defense items for small tolerances, rigid in- 
spection, and so on, make conversion of the curtailed plant difficult. 

Now it is obvious that management itself plays an important role in the 
migration picture. Management can exercise much ingenuity in devising ways 
and means, through adaptation of plant, through simplification of design and 
substitution of materials, to avoid curtailment of operation. But in many cases 
this way out may prove too difficult and labor will be forced to move. 

I do not believe that this Nation can afford to look upon its defense program 
as a boom or a gold mine. By its very nature, a defense program on so large 
a scale as ours means sacrifice, readjustment, economic loss. Arms and muni- 
tions do not enter into ordinary trade and consumption. The energies given to 
their production cannot also be given to ordinary peacetime pursuits. 


One of the basic problems, therefore, is not how to distribute the gains but 
how to distribute the sacrifices and at the same time get the maximum of 
defense and other essential production. At this time, there is a considerable 
amount of confusion among businessmen concerning their role, as makers of 
managerial decisions, in this program. Such confusion at the present time seems- 
inevitable, and its removal is a problem common to government and business. 
As a matter of fact, the Government is acutely aware of the fact that confusion 
and uncertainties exist in business. Mistakes have, of course, been made, both 
by defense agencies and by business agencies. These mistakes are part of the 
cost of building up so vast an effort in so short a time. A succes.sful business 
enterprise is often the result of many years of trials and errors. We are now 
going through the growing pains of rapid expansion. Probably business never 
before expanded at such a rate. From July 1940 to September 1941, actual 
expenditures for defense increased every month except two, over the preceding 
month, by amounts up to 50 percent per month. Confusion and growing pains 
cannot be avoided under such conditions, but aggressive efforts can be made to 
minimize such pains. 

One step recently taken to aid in reducing and finally eliminating the confu- 
sion was the Executive order creating the Supply, Priorities, and Allocations 
Board. This Board, designed and functioning as a policy-making agency, has 
already, as you know, embarked on the task of establishing major, over-all 
policies as guides to the adjustment of industry to the needs of the national 

One of this Board's first declarations, on September 2, was, in part: "The 
Board realizes the magnitude of its task. It recognizes as well that success 
requires a vigorous, uiiited effort on its part together with unstinted cooperation 
from the pub'.ie in accepting certain responsibilities necessary in the defense 
of our democratic institutions. 


"Our general policy is simple. Production shall be stimulated and organized to 
the limit of the Nation's resources. Every available man and machine must be 
employed either on direct defense requirements or at work essential to the civilian 



economy. Along this road lies protection of our freedom and of the basic economy 
to maintenance of that freedom." 

More specifically, the Board faced squarely the issue of eliminating the eco- 
nomic fat. It said : "We must forego the less essential, that we may have an 
abundance of the more essential. * * * Wherever possible to convert the less 
essential to military or essential civilian production, this will be done. Every 
means will be employed to expedite this process with a minimum loss of time for 
men and machines. But the less essential must go. This means working off the 
fat and hardening the muscles.'' 

In this connection, I think we should not overlook the fact that Great Britain 
and her allies are said to be giving about 50 percent of their total productivity to 
making munitions and the other needs of war, while we here are not yet giving 
over 20 percent of our productivity to that effort. Nor should we for a moment 
forget that modern war is economic war, that it means battles of production behind 
the actual fighting lines, and that the production battles are decided not alone by 
materials but by labor and management. 

To outline further the policy objectives of Supply, Priorities, and Allocations 
Board, I should like to add certain other declarations : 

^) «* * * * While recognizing that the civilian economy must be stripped 
of nonessentials, it must be kept in good running order and in more than stand-by 

(2) "Those materials, which may be hoarded * * * will be routed out and 
put to use where most needed in military and essential civilian production. 

(3) ''Scare buying against imaginary requirements of the future will be dis- 
couraged effectively. 

(4) "The goal our country must reach to perpetuate our freedom and to assure 
victory for all who share our democratic philosophy means sacrifice. But we must 
make certain that sacrifices are not imposed because we are wasteful ; because we 
fail to look ahead, or because proper use is not made of all available materials, 
men, and machines. 

(5) "The Board believes that if the public knows why it must forego certain 
comforts * * * why, in substance, the fat must go and the muscles be strength- 
ened, the cooperation vital to success will be had in full measure." 

Following these and similar policy declarations. Supply, Priorities, and Alloca- 
tions Board has met a variety of issues by — 

(1) Denying of application for construction of a certain nondefense plant re- 
quiring large amounts of scarce and critical materials. 

(2) Ordering compilation of full schedules of military and civilian requirements 
as far ahead as possible, to be broken down into schedules of raw materials, labor, 
and machinery needed for production. 

(3) Planning for expansion of supplies of critical metals, and of certain dairy 

(4) Permitting manufacture of commercial transport planes designed accord- 
ing to certain military needs. 

(5) Refusing to issue priorities for the construction of nonessential public or 
private construction projects which use critical materials such as steel, copper, 
bi'ass, bronze, aluminum, and so on. 

(6) Putting in motion programs for collecting data on inventories of essential 
materials, in whatever hands they may be found. 

(7) Providing for getting information from the appropriate divisions of Office 
of Production Management relating to the status of labor supply, labor training, 
machine tools and equipment, and plant and mine expansion projects. policies either have the effect of defining objectives, or of limiting 
specific actions by industry. These policies do not undertake to tell any indi- 
vidual what to do or how to do it, within the areas of action left open to 
him. And that is where the opportunities for individual initiative and indi- 
vidual planning are found. That also is where the responsibility for etficient 
action is placed so laigely on the individual. 

In responding to these opportunities, the individual business executive has 
ordinarily these choices : 


First : To continue in his ordinary activity. This choice may not be easy. 
Risks of materials shortages, of competition for labor, of shifting demand, 
must be calculated in the light of the facts arising from a cliange-over in the 
total economy. To anticipate correctly the effects of cutting off the fat is- 


no simple problem. It may, in a given case, call for great ingenuity in re- 
designing of products through simplification, standardization, or substitution. 
Planning of au unusually high order, therefore, is called for. 

Second : The businessman may choose to seek direct defense orders or be a 
subcontractor. Typically, these orders call for special production techniques, 
for plant conversion or expansion, for retraining of labor and supervisors. 
Furthermore, they call for different, and often more stringent, inspection 

Planning for direct defense orders also raises problems of pricing, financing, 
negotiating ; of subcontracting, with its corollary problems, and of foreseeing 
post-emergency conditions. 

Third : A businessman may choose — and this choice may in many instances 
require the greatest risks and therefore the greatest courage — to separate him- 
self from a job he regards as nonessential in order to seek out an opportunity 
for rendering service to the Nation. 

All these choices may involve special economic risks and sacrifice, perhaps 
long-lasting dislocation. Yet there is no reason to doubt that, in the interest 
of national unity and of speed in getting the job done and done well, the individual 
businessmen of this country will make these choices willingly. And if the 
initiative of the individual is applied energetically to the job of planning how to 
carry out his choice, there can be no doubt about the final outcome. 

To speed up and direct the application of all industrial energy to the needs of 
the emergency, it seems to me that we must solve two basic problems. I should 
like to describe them briefiy, and also to report that the process of finding solu- 
tions for these problems is already well under way. At this moment, I cannot 
give final answers to the problems, nor can I forecast in specific detail what 
administrative machinery will be set up to translate the solutions into action. 


The first of these problems is to work out acceptable definitions, or guides to 
definitions, of what is "more essential," and what is "less essential." Our economy 
is complex, and we are going through the process of shifting a substantial and 
increasing portion of our productivity to direct military needs. Thus our con- 
sumption of metals in the production of arms, munitions, planes, ships, and so on 
has risen so greatly as to curtail and in some instances prevent the production 
of nonmilltary items. But we must not blindly divert too much, nor divert it either 
too soon or too late. The reason is simply that military demand is not the only 
essential demand. Our total economy, though it may be lean, must continue to 
function effectively. Otherwise, the military progra.n itself would be jeopardized 
and might even fail of its goal. Health, safety, and good morale are economic 
essentials, and the supply of goods and services necessary to maintain those 
essentials cannot be permitted to fall below minimum levels. To determine what 
those levels are, and how to assure adequate economic supplies to support them, 
are parts of the problem of defining "more essential" and "less essential." 

The other problem which I wish to present is that of coordinating the demands 
for essential goods and services with the supply. This is chiefly a problem 
in making a time schedule of the more essential demands — military and non- 
military— and then projecting allotments of materials and plans for production 
adequate to meet these scheduled demands. I need not emphasize the com- 
plexities of this task, but I should like to make clear the crucial importance of 
the time scheduling of total essential requirements. 

Our experience to date indicates that mechanisms either exist or can be 
developed for coordinating demand and supply in such a way that industry will 
know fairly definitely what is ahead. Among the mechanisms are output cur- 
tailment programs, some of which already have been announced. For instance, 
the automobile indu.stry will be curtailed on a percentage of finished output, or 
end-product basis. Copper, in contrast, will be controlled from both sides of the 
production structure: i. e., by curtailment of end products, and also by the 
mechanism of specific allocation of copper supplies to uses classified as essential. 

In the application of these and other coordinating mechanisms, every attempt 
is being made, and will continue to be made, to avoid arbitrary or unfair dis- 
crimination among industries and individual plants. For this purpose, it is 
my hope to see the establishment of basic policies stating the principles to 
be followed in curtailments, allocations, and other coordinating mechanisms. 
These principles should cover such questions as maintenance of essential economic 
functions, and minimizing of actual economic hardships. 


Now, there raust be no question about the absolute necessity for restrictive 
and, in some cases, prohibitory economic policies. Shortages exist now and more 
shortages will develop, no matter how persistently we seek to expand the 
mining, processing, and finishing of essential materials. 

But likewise, there must be no doubt about the emergency nature of our 
interference with the normal workings of a free economic system. One of our 
objectives is to maintain present freedom of business action as fully as is con- 
sistent with the emergency program we are building. Another objective is to 
preserve the framework of our economic system so that the post-emergency 
economy may return as quickly as possible to its normal ways of operating as 
a free economic society. 


Mr. Sparkman. I am not going to ask you at this point to describe 
the authority of S. P. A. B. or its administrative functions in greater 
detail than you have outlined them in your paper, because I believe 
that information will develop as we go along. Instead I would like 
to direct your attention to a more comprehensive question, which is 
well summarized in the prepared statement of Dr. H. S. Person, 
well-known economist and a member of the panel of industrial engi- 
neers who will follow you on the stand. 

Dr. Person has this to say in his prepared statement:^ 

The radical, the effective, the urgent step is still to be taken. There is still 
to be set up an agency, with the authority of common consent as well as of 
law, and with the competence of technical knowledge, whose task will be to 
organize all the plants of the Nation into one great coordinated national plant 
along the same lines in which the best-managed medium-sized plants are now 

We are very much interested in this quotation because at the time 
when your Board was established, we understood it was to do this 
very thing. Now, if Dr. Person is correct, we would like to have 
you tell the committee what your Board lacks to make it adequate 
to this task. 


Mr. Nelson. Well, sir, in my opinion the one thing that has been 
lacking around here for some 14 months — and I believe it is no one 
person's fault — is a full knowledge of what the requirements are 
going to be. I can't hold the Army or the Navy to blame for that. 
If we look back at our situation 14 months ago and compare it with 
what we can see today, I think every one of us will realize that we are 
a good deal further along in the realization of the job. 

To me the job is perfectly clear, although perhaps the magnitude 
isn't clear yet to the Nation. The President said last night: "Our 
job is to see that Hitler is licked." Now, just how much of a pro- 
gram that involves, how large the commitment for this Nation to 
undertake, has never yet been put on paper. However, I think 
progress is being made in that direction. 

I think the whole question of what our industrial plans ought to 
be starts with the knowledge of what our requirements are. The 
first action that S. P. A. B. took was to request this information of 
the Army and Navy through its executive director. I submitted 

1 Dr. Person's statement appears on pp. 8034 ff. 


that request, and we are now getting complete cooperation from the 
Army and Navy in our efforts to determine what all-out requirements 
may be for the defense of this country. Given that, given the knowl- 
edge of how many airplanes we need, how many tanks and anti- 
aircraft guns, how many implements of war of all kinds, and then 
given a schedule for delivery, we can proceed to do the very thing 
that Dr. Person talks about, and which I think is very essential. I 
have thought for a great many months that we need to know what 
our over-all requirements are, we need to know our time schedule; 
and having that information, it is comparatively easy for the Presi- 
dent to organize the production set-up and the machinery for con- 
trol. The S. P. A. B., or Supply, Priorities, and Allocations Board, 
sets major policy. It is appointed by the President with the author- 
ity to make decisions — decisions which can be overruled only by the 
President himself. 

Now, you have that agency to make major decisions of all kinds. 
You have O. P. M., set up as a production organization to see that 
the materials are obtained, to see that purchases are well coordinated, 
to see that production is well planned. And I believe that if we 
start with some knowledge of what our problem is, what our require- 
ments and time schedule are to be, then we can go about the job of 
properly planning the production of those materials which are 
needed, not alone for our own defense program, but to aid our 
friends and those who can put such weapons to good use in seeing 
that Mr. Hitler is licked. 

That would be my first answer. I think anyone will say that the 
first thing you must do, if you have an industrial planning job on your 
hands, is to inform yourself on these questions: What are your aims? 
What are your requirements? How much time do you have? 


Mr. Sparkman. If and when the requirements are known, then, it is 
your opinion that the present agencies do have the authority or the 
power to execute that program ? 

Mr. Nelson. Yes, sir. In cooperation with the Army and Navy, 
those agencies can see to it that we go ahead efficiently. If they 
don't do it, it can only be because of a lack of ability. 

Mr. Sparkman. We all are attempting to realize the immensity of 
this program. 

Mr. Nelson. That is what I want to make plain now. 

Mr. Sparkman. And only a few days ago the President said it was 
to be greatly stepped up, probably doubled. 

Mr. Nelson. Yes, sir. 

Mr. Sp-^rkman. In your statement you say this on the policy of 
your Board: 'S. P. A. B. does not undertake to tell any individual 
what to do or how to do it within the areas left open to him." 

Does this mean that if a firm does not choose to put its resources 
into the defense effort it will be free to stay out regardless of the con- 
tributions it might make ? 

Mr. Nelson. No, sir. That is not what was meant. A firm is not 
free so to choose. We have all the power and prestige that is needed 
to have that firm come in. We have the commandeering section of the 
Selective Defense Act, and that act. implemented with a requisition 
clause, has been passed by Congress and signed by the President. 


There is ample authority today vested in the proper agencies to 
bring anyone into this defense program whose services are absolutely 

S. P. A. B., in its decisions, has not been trying to tell people what 
to do. Kather, it has been trying as far as possible to eliminate un- 
certainty in people's minds. I think one of the most serious causes of 
confusion is uncertainty. In the businessman's mind, if there is un- 
certainty as to how many automobiles he is going to be able to make, 
for example, he is unable to plan his production and sales programs. 
His employees feel uncertain. His dealers feel uncertain. The public 
feels uncertain. Now, if you have a mechanism whereby that question 
can be settled — namely, the number of automobiles for which we can 
spare material, which is the determining factor in these limitation pro- 
grams — this will eliminate the uncertainty in the picture. 


These limitation programs, which have been prepared by the Divi- 
sion of Civilian Supply, will be made public so that each manufacturer 
will know about how big his own job will be. It should be perfectly 
apparent to the country at large that we cannot undertake this job and 
at the same time continue with "business as usual." It can't be done. 
We haven't the materials or the resources to do it, for the simple 
reason that as we spend more and more money, our civilian economy 
keeps on rising, until we are stymied. People make more money and 
they want to spend the money "they have. They are perfectly willing 
to buy anything that they feel they want. It is obvious that we cannot 
carry through the defense effort and at the same time take care of the 
wants of the civilian economy on such a rapidly expanding national- 
income basis. It simply can't be done. It physically cannot be done. 
Therefore, the defense program must go forward, and the civilian 
economy must accommodate itself to the requirements of national 

This is all part of the same thing I discussed in answer to the first 
question. When we know the situation that is ahead of us, and we 
know our total resources, we are then able to determine how much 
material and services can be allowed to go into civilian production and 
liow much must be reserved for the military. That is the job that I 
believe confronts us today. And under the Executive order of the 
President, S. P. A. B. can make major decisions applving to this whole 

Mr. Sparkman. When the information you mention is provided the 
Government agencies, then it will be their intention to give the busi- 
nessman an opportunity to pla.ce his plants and resources at the dis- 
posal of the defense effort ; but, failing in that, it is your opinion that 
there is ample authoritv already lodged in the proper Government 
officials to force him to do so. Is that correct? 

Mr. Nelson. Yes, sir; definitely, 

Mv. Sparkman. Suppose he was running two shifts, and it was felt 
lie ought to be putting in three shifts. Could he be made to do that ? 

Mr. Nelson. Well, I am not a lawyer and, therefore, I shall not 
attempt to answer categorically. As a matter of fact, that question 
hasn't come up. The question of whether you run one, two, or three 


shifts depends largely on the circumstances of the individual plant. In 
some instances a three-shift operation is not as productive as a two- 
shift operation. 

Mr. Sparkman. I was speaking of shifts only by way of illustration. 
What happens if the determination is reached that the firm is not pro- 
ducing to its utmost? 


Mr. Nelson. I believe, sir, that there is ample authority to force 
such a firm to do so. It is my experience, however, in every case so 
far, that when that problem was put up to an industry, the industry has 
responded. I don't know of a single case in which an industry, having 
been shown a necessity for defense, has not made provision to take 
care of it. 

Mr. Sparkman. That question was prompted by another part of 
your prepared statement, in which you say — 

production shall be stimulated to the limit of the Nation's resources. Every 
available man and machine must be employed, whether on direct defense require- 
ment or at work essential to the civilian economy. 

Mr. Nelson. When we see the size of the program that is ahead of us, 
we are going to realize that it cannot be accomplished unless those 
conditions are fulfilled. 

Mr. Sparkman. And you believe that ample authority exists to see 
that they are? 

Mr. Nelson. Yes, sir; I do. 

Mr. Sparkman. In the Detroit hearing, in reply to charges made by 
the United Auto Workers Union that the motor companies, in order to 
extend a profitable season, had refused to convert their facilities, auto- 
mobile manufacturers replied that not one manufacturer has ever 
refused a request for production. Do you know how many manufac- 
turers have been requested to make a specific item on the basis of an 
appraisal of their facilities? Is it a considerable number? 

^Ir. Nelson. I don't know how many. It is a very considerable num- 
ber, and I don't know of any refusals. 

Mr. Sparkman. You have always met with a good response and 
cooperation ? 

Mr. Nelson. In the situation affecting the automobile industry 
there was a difference of opinion at the start as to whether or not 
the machinery of the industry was adaptable to defense production 
without a great many changes. I heard the statement made by per- 
fectly reputable people that only 20 percent of the machinery was 
adaptable. I think that has changed. I think that since then we 
have found ways and means of adapting that machinery, and will 
find ways and means of adapting it still further. I think our con- 
ception of the kind and type of machinery that can be adapted has 
changed, and is going to change a good deal more before we are 

conversion progress not satisfactory 

Mr. Sparkman. Is it your feeling that there has been satisfactory 
progress in the program of converting industry to the production 
of war materials? 

Mr. Nelson. No, sir ; I do not. 

60306—41 — pt. 20 2 


Mr. Sparkman. You do not think that conversion h;is come about 
as last as might have been expected? 

Mr. Nelson. I don't think so. I think there has been too ready an 
acceptance of the theory that in order to produce effectively we must 
buy new tools rather than adapt old tools to this production. I think 
the English and German experience show^s c^uite clearly that you don't 
always need specially designed single-purpose machinery to be able 
to accomplish the objective.^ True, it may cost more money, and it 
may not be quite as efficient. But I am of the opinion that a great 
deal of the present machinery of industry can be converted to the 
making of materials for defense. That comes about through a change 
in tolerances, due to ability of management to do the job, ability of 
the industry to adapt itself; and as I have said in this statement 
which I have given to you, I think management has to be more 
flexible. I think it is a two-way proposition. Management has to 
be more flexible and adapt itself "more readily to what is needed, just 
as we in Washington must be more flexible in seeing this adaptation 

Mr. Sparkman. Mr. Morris Cooke, who appears on the industrial 
engineers' panel which follows you, has submitted to this committee 
a statement which is sharply critical of the Army's present pro- 
cedures and their training and ability for mobilizing defense pro- 
duction. I am quoting from the summary of his statement. 

The Army, Navy, and Maritime Commission place all purchase orders. But 
these agencies are reluctant to assume any part of the responsibility for what 
happens under the contract, and seem to practice about the minimum of 
follow-up. The attitude is too legalistic for war. Procurement, which is the 
type of buying practiced by the military, is fairly easygoing and is not at all 
tile equivalent of the term "production" as used in private industry where 
volume and tempo are what really count. Too much dependence is placed on 
the contractor, and as a rule too little pressure kept on him to do better than 
what he claims to be his best.* 

What are your views on this statement? 

Mr. Nelson. I should say, first, that the Army has the basic re- 
sponsibility for getting the implements of war that it needs. It 
places the specifications. I also think the degree of adaptability 
required depends a great deal upon the size of the program which is 
contemplated. When we were thinking of this whole defense pro- 
gram in terms of a $7,000,000,000 or a $15,000,000,000 effort, if I had 
been a procurement officer for the Army or Navy, I would have 
wanted to place the contracts for that amount wherever the work 
could be done for the least amount of money. But I have always 
said that tlie way to force better buying, better distribution of orders, 
was to increase the size and tempo of the jjrogram. Then necessity 
would require that a great many things be done which were not 
forced under a narrower concept of the program, the program needed 
to attain tlie objective which I saw^ in the offing — namely, to see that 
Mr. Hitler was licked. 

Mr. Sparkman. Now^, I want to quote from the statement of Dr. 
Person, who will also appear on the engineers' panel. We may 
seem to be checking up on those fellows through you, but it is all 

IMr. Nelson. I believe it is, sir. 

1 See pp. 8052-8056, and 8058-8068. 

2 Complete statement appears on pp. 8042-8052. 


Mr. Sparkman. Dr. Person has come to the parallel conclusion that 
I got from Mr. Cooke. He says : 

The military establishments appear to have no basis in experience for competent 
inventorying of national facilities and for organizing and following up production 
processes on a national scale. 

He suggests further that a civilian group "skilled in engineering and 
the direction of production" be assigned the task of scheduling produc- 
tion, either as part of the military or as part of a separate over-all 
planning board. Do j^ou think that the adoption of either of these sug- 
gestions would accelerate the defense program? 


Mr. Nelson. Oa that subject I would refer you to the chronological 
account of the development of the present organization. As I under- 
stand it, the obligation of O. P. M. in this connection is just that. They 
have civilian experts who work with the Army and Navy to assist 
them as the program develops. There can be more of a dependence 
upon those experts and better men will be brought in to take over. I 
do not mean to say that we necessarily have to have the present type 
of organization. But with O. P. M. set up, I have felt that it could be 
a means of bringing in the best civilian brains in the United States to 
help the Army and Navy. That is what I have always conceived the 
job of O. P. M. to be. 

Mr. Sparkman. I want to refer to another member of the forth- 
coming panel, Mr. Henry. He has suggested that every contract that 
has a completion date beyond June 1942 be reexamined to determine 
(1) where more machine-hours per day and man-shifts per week could 
possibly be put to work on the contracts within the plants of the 
prime contractor (that is, go from a one or one-and-a-half shift 
basis as is prevalent in many defense plants to a three- or four-shift 
basis), and (2) how much of the contract could be farmed out to other 
factories which are not now completely occupied with defense work.^ 
Do you agree with that? 

Mr. Nelson. It is a very sensible suggestion. I am certain it is. I 
would go along 100 percent with it. 


Mr. Sparkman. Would you also suggest that all outstanding large 
contracts, regardless of their completion date, be reexamined in the 
same way? 

Mr. Nelson. Yes, sir. 1 have been on record several times before 
congressional, committees in favor of such a procedure. That is one 
of the ways to speed up the work. Some of the terms of these contracts 
should also be reexamined. You must remember that some of these 
contracts are on a fixed-price basis and therefore if another shift is 
added it may involve even more expense, because usually the second 
shift is not as productive as the first, and the third is not as productive 
as the second, by a large margin. Therefore, speeding up the program 
involves another look at the contracts, another look at the total 

' Complete statement appears on pp. 8074-8076. 



amount, and at the time schedule. It should be remembered that the- 
size of the job before any one company will affect its attitude toward 
doin^ the job. It will affect the attitude of the workers toward the 
job. That is just human nature. When they see the contract running- 
out on a date, there is a natural tendency on the part of the worker to 
slow up, and there isn't the impetus on the part of the manufacturer 
or the managerial orfranization to force it through faster. Therefore 
I think the additional volume given to any concern should be a con- 
sideration in any reexamination of the contract. 

In other words, there must be a time objective in this program, a 
definite date by which we feel a certain quantity of materials must be 
ready. There must be a definite plan and schedule of requirements. 
Then, as these contracts are reopened, and the size and tempo of the 
job are both increased, it may be necessary also to make adjustments 
in price. In some cases the additional quantity may actually lower 
the price. To me that seems basic in this whole effort. 

Mr. Sparkman. It seems to me that these are very practical pro- 
posals, which not only would accelerate defense production, but also 
would bear upon the problem with which this committee is primarily 

Mr. Nelson. You are referring, I assume, to the spread of em- 
ployment throughout the United States, instead of building concen- 
trations of defense industry in places which are already overpopu- 
lated. As I said the first time I appeared before you, we add 
tremendously to our civic burdens by overcrowding present centers of 
production. You have been in San Diego and you saw what had to 
be done in the way of providing new schools, sewers, and liouses. 
Those needs are all extraneous to the contract, but they are there just 
the same. The Government has to pay the cost. Therefore, why not 
pay a minimum cost? I would suggest that you review the Executive 
order conferring authority on Mr. Floyd Odium's Contract Distribu- 
tion Service, which recognizes that the cost is as much as 15 percent 
additional on a given item when it must be produced in an area 
requiring all those additional facilities. Avoidance of excess pro- 
duction in already overburdened communities is money saved to the 
United States Government. 

Mr. Sp.^rkman. Can your board do anything about this problem 
through the allocation of materials? 


Mr. Nelson. I feel that S. P. A. B. can do almost anything in almost 
any direction, because it is given the authority by the President of 
the United States and is heacled up by the Vice President as chairman. 
I feel that it can go into this thing in almost any direction that may 
be needed. But I also think that any group undertaking this job must 
see what the total, over-all requirements are, and what the time 
schedule is. 

Mr. Sparkman. Does S. P. A. B. review the delivery dates set by the 
Army and Navy? 

INIr. Nelson. We have not up to the present, sir. We are attempt- 
ing to get the total over-all requirements and time schedule. 

Mr. Sparkman. Are those delivery dates set in consultation with 
O. P. M.? 


Mr. Nelson. Yes, sir. 

Mr. Sparkman. I should like now to sum up your view of the situa- 
tion briefly. It is this, as I understand it : First, we do not yet know 
what the requirements are. 

Mr. Nelson. Yes. 

Mr. Sparkman. The manufacturers and the people themselves are 
not informed. 

Mr. Nelson. Right. 

Mr. Sparkman. Would you agree that the manufacturers and pub- 
lic have not yet come to a realization of how greatly they are going 
to have to curtail their normal production and normal wants? 

Mr. Nelson. Yes. 

Mr. Sparkman. You believe that when they have realized this, there 
will be a spirit of cooperation which will enable the program to move 
along ? 

Mr. Nelson. Yes ; definitely. 

Mr. Sparkman. But if there is a failure anywhere to cooperate 
properly, you think the necessary power is properly vested in some 
agency or some official to see that the program does move along ? 

Mr. Nelson. Yes, sir. 

Mr. Sparkman. That is all. 

Mr. Curtis. Mr. Nelson, has S. P. A. B. or any other agency all the 
necessary information in regard to total national inventories of 
various materials? 

Mr. Nelson. Yes, sir; the information in regard to total national 
inventory of materials is available, and also in regard to total national 
productive facilities. The individual inventories we are getting at 
through questionnaires. For instance, we have surveyed all the ware- 
houses of the country through trust companies, railroad terminals, 
and the like. 

Mr. Curtis. Is that true of machines and tools ? 

Mr. Nelson. That is not true of machines and tools. I think we 
have pretty accurate information on materials, and we have the ma- 
chinery set u]) for gett'ng at the information we need on machines 
and tools. I think many surveys have been made. 

efficiency of government surveys explained 

Mr. Curtis. In the tratherinc: of this information, is it quicker and 
more effective to proceed as you have been doing through trade and 
business channels or to have the Federal Government authorize vari- 
ous censuses and inventories, which would require new organization 
and personnel? 

Mr. Nel«on. I have felt right along that the job could be done most 
efficiently by Government people working through the industry. You 
<*an assemble the information much faster by getting it from industry 
itself, and I believe that as we get to know more of our requirements, 
industries can better adapt themselves. 

For instance, the washing-machine industry quite recently — and 
I think this is rather epoch-making in this defense program — seeing 
that it was to be curtailed, started its own survey, w^orking with the 
Government to determine what type of things it could make. That 
industry has made a survey, working with the procurement officers 
of the Army and Navy, and has now taken contracts running into mil- 


lions of dollars to make fijiin mounts. It is adapting its machinery to 
that particular item, after having worked out the contractual relations. 
It serves as a good example of an industry coming in and helping the 
Government by adapting its machinery to defense needs. Yes; I be- 
lieve that the very best method of gathering the information is through 
industry itself. 

Mr. CuETis. That would be superior to utilizing a branch of the 
Government, such as the Bureau of Census, and assigning enumerators 
not trained in mechanics or anything else. 

Mr. Nelson. Yes, sir. There have been too many surveys made by 
all kinds of organizations — State governments, chambers of commerce^ 
the National Manufacturers' Association, and others — on what ma- 
chinery is available. But I think we need a method that more directly 
animates the whole program. That is the ability of management to 
make the machines do the job. Just a plain enumeration of ma- 
chines, in my opinion, has never been enough. 

Mr. Curtis. And the enumerator has to have knowledge of what is 

Mr. Nelson. Yes, s'r. He must know how to adapt Avhat we have 
to the need. It is that greater adaptability that I think that we will 
require. When we see the size of the program, bang-up before us, the 
w^hole question will be what we can do with what we have, rather 
than how we are to get new machinery for each job. 

Mr. Curtis. It has been my observation and conviction that the 
majority of the people, perhaps 100 percent of them, are decidedly 
loyal, and want to do their part, but sometimes they do not know 
how to do it effectively. No doubt small industry, small manufac- 
turers or shops, especially in the interior of the country where they 
are not close to the big plants, are doing many things that seem 
confusing to official Washington. Would you care to make any com- 
ment on what small business is doing to secure defense orders? 


Mr. Nelson. I don't know that I am competent to say what small 
industry is doing, or failing to do, for national defense. In general, 
I think we must try to devise some method of bringing these small 
fellows into the picture. A better knowledge on the part of Army 
and Navy procurement officers of the necessity for brinijing these 
people into the program and a realization on the part of the larger con- 
tractors that these small fellows have ability to do many jobs, are help- 
ing to bring about a constructive change, I believe. We see that change 
coming. Just how many of those industries can be adapted we are not 
able to say. I don't think that anywhere near 100 percent, probably 
not more than 25 or 35 percent, can be fitted into the picture. But I 
should say that the thing that small business needs more than any- 
thing else is guidance on wdiat to do and how to do it. That means 
guidance in each comm unity. I have suggested to several communi- 
ties the holding of nondefense clinics, which would help to show what 
substitutions can be made, how men who are doing a job now requir- 
ing critical materials may, through borrowing engineers from other 
organizations that have met the problem, be better able to adapt 
themselves. Oftentimes the small man does not have the engineering 
ability to make the necessary adaptations in method and I think that 


just as defense-industry clinics, showing business how to adapt 
itself, we must hold nondefense clinics to show the nondefense in- 
dustry how it can do a better job of carrying on. 

Mr. Curtis. It has been reported in the press that over 20,000 small 
firms have gone out of business in England since the war began, 
and that at least that many may be expected to do so in this country 
during the defense period. But I think you have outlined the policy 
of S. P. A. B. with regard to utilizing these resources and keeping 
these small firms in active civilian production. 

Mr. Nelson. I have tried to answer that. We need to work first on 
showing them how to adapt themselves to defense, and on helping 
them to do other things in civilian production when they cannot con- 
tinue as in the past. 


Mr. Curtis. What has been done to expand facilities for the pro- 
duction of basic commodities, such as our 10,000 000 tons of steel ? 

Mr. Nelson. That is one of the problems that S. P. A. B. has 
tackled very energetically. It seemed that the first job we should do 
was to review^ every possible avenue of available supply, because no 
matter what we are making now, we are going to need a great deal 
more of the same thing. S. P. A. B. has reviewed with each of the 
agencies of the Government what might be done to expedite the pro- 
curement of more supplies. In the case of a material like copper, 
an increased supply might involve paying more money for metal 
from the marginal mine. This has been done. It means acceleration 
of the expansion of facilities, to produce more copper. S. P. A. B. 
is surveying every critical material to find out ways and means of 
expanding production. We have surveyed steel, copper, aluminum, 
magnesium, nickle, cobalt. In that field S. P. A. B. has done, in my 
opinion, an excellent job, and it will continue until we know more about 
the total over-all requirements. 

Mr. Curtis. The paying of more money for copper from the mar- 
ginal mines may in the long run result in an economy, may it not? 

Mr. Nelson. It is definitely an economy. 

Mr. Curtis. Because it saves reserves ? 

Mr. Nelson. Right, sir. I am positive that it is an economy, and 
it is recognized as such. Mr. Henderson, who has been entrusted with 
the job of price administration, has been keen to do that wherever 
we could increase production. 


Mr. Curtis. Given a shortage in a critical material, and a need for 
curtailment of a less essential industry, what is S. P. A. B.'s proce- 
dure of allocation among various companies? More specifically, 
what is your viewpoint on permitting all small companies employing, 
say, 10 people or fewer, to utilize all the raw materials needed to 
meet 100-percent quotas until the large companies with their superior 
technical facilities and resources get into defense production? 

Mr. Nelson. One of the things that S. P. A. B. undertook at its 
very first meeting was to instruct the executive director for supplies 
and priorities to see what could be worked out. We have a method 


now which we think will be a simple allocation. We can't give them 
100 percent of what they want, but I think that what is needed is to 
distribute a definite amount of materials, even though they may be 
scarce materials, to help a fellow over until he can readjust his busi- 
ness. I think within a week now we will have an announcement on 
something in this direction, that will go a good part of the way 
toward solving the very problem you have been talking about,^ It 
has been one of my objectives to find a simple system whereby we 
could do two things : First, by giving a small amount of material, 
enable a man to manufacture a large volume of end product, there- 
fore giving employment to people; and secondly to enable the small 
man to get small amounts of material that will help tide him over 
during the process of reconverting his business. 

Mr. Curtis. Will that system be such that a company will know 
for a period of months or maybe a year that there will be available 
raw materials up to, say, 60 percent or 70 percent of its past con- 
sumption ? 

Mr. Nelson. We can't do that until we know the total over-all re- 
quirements. We must know how much of that material we are going 
to need for military purposes before we can determine how much is 
to be allocated. We are getting that information in very good shape 
now, and I should say within 30 or 40 days we will have a pretty 
definite idea of just how large the military requirements are going 
to be. Then we shall start with a change in the method of allocation 
of that material to the military services and to industry. We are 
starting now to make experiments in allocations leading in that di- 
rection. I have said several times that I felt that the present system 
of priorities wouldn't work over a long period of time, particularly 
where there were shortages resulting from the demands of the mili- 
tary program. The present method of assigning a priority rating 
to an industry does not assure balanced quantities of the material. 
Until we know what the total over-all requirements are, however, we 
can't answer the question which you have asked me. 

Mr. Curtis. But that will be your ultimate objective? 

Mr. Nelson. It has to come. 

Mr. Curtis. But the policy to be announced in a week or so will 
take care of the interim? 

Mr. Nelson. Yes; particularly for small business. 

Mr. Curtis. I feel if the managers of small industry once find out 
what they can do, they will accept the situation and be glad to make 
the necessary sacrifice. They will make substitutions of their own, I 
helieve, and they won't have so many problems to submit to Wash- 
ington. Do you agree? 

misunderstanding or priorities system 

Mr. Nelson. That is right, sir. I would like to say, however, that I 
think there has been some misunderstanding about the whole priorities 
system with respect to the small manufacturer. I have read in the 
press, and have seen statements made by the smaller manufacturers, to 
the effect that the priorities system tends to force them out. The sys- 

1 On November 7 the S. P. A. B. announced a change in policy, from a system of priorities 
to a system of aUocations. 


tern was not intended, certainly, to force the small manufacturer out, 
and we don't want to see any system used in that direction. What has 
happened, I think, to a very large extent — and I don't know that there 
is any way we can get at the problem — is that the smaller manufac- 
turer has been cut off by many of the larger manufacturers, because 
when they have more business, the larger manufacturers of raw ma- 
terials or of finished products have a greater demand than they can 
supply. The larger manufacturer or supplier of raw materials will 
cut off from his books the fellow with the least desirable credit ratings 
and in many instances priorities have been blamed when no priority 
has figured in the situation. I have had instance after instance of this 
pointed out to me, in which materials that were not even on priorities 
lists, such as paper, lumber, brick, glass, have been withheld from the 
smaller manufacturer. Often he says priorities have prevented him 
from getting his material, whereas his failure to get it really was due 
to the fact that he was being cut off' in favor of someone else. A re- 
vamping of the priorities system will not stop that practice. 

Mr. Curtis. Are you able to say whether or not you will ever have 
to establish a priority with respect to newspaper print ? 

Mr. Nelson. 1 don't think so. But there has to be more conservation 
of paper. 1 think there is too much waste of paper in this country. 

Mr. Curtis. Congressional speeches, for example ? 

Mr. Nelson. I wouldn't limit it to congressional speeches. 

The Chairman. Mr. Nelson, one of the fundamental needs to which 
you have called attention is a survey of our requirements, which you 
are making now. 

Mr. Nelson. Yes, sir. We are working with the Army and the Navy 
to get those requirements. 

The Chairman. Are you working out any plans for a comprehensive 
survey on a Nation-wide scale? 

Mr. Nelson. That is being done, too, sir. 

The Chairman. What about manpower? 

Mr. Nelson. Yes, that also is being done, through Mr. Hillman's 
Division at O. P. M. He has a very good idea of the manpower in the 
United States. 


The Chairman. The committee was startled a short time ago at one 
of our Washington hearings when it was stated that a survey had 
been made of the State and Federal employment agencies, and that 
at that time there were 5,000,000 persons registered and out of work.^ 
Of course a good many more are not registered. I have always had 
the impression that the State and Federal employment agencies 
have not been given enough attention. I receive many letters from 
workers and I always tell them to file with the employment agencies. 
They come back months afterward, usually to tell me that no action 
has been taken on their application. I oftentimes wonder whether 
we couldn't make those lists a little more active than they are. 

Mr. Nelson. I think you will find, sir, that Mr. Sidney Hillman 
has been working on that with his whole division, and is arriving 
at methods of making better use of the lists, and of making the 
Employment Service more adaptable to the needs of industry, in 

^ See testimony of Arthur J. Altmeyer, Washington hearings, pt. 17, p. 6782. 


the hope that they will be used more by industry when industry needs 
people. He would be able to give you a much better picture of 
that than I can. 

The Chairman. I think you are absolutely correct in pointing 
to the uncertainty in regard to what the small man can get and do, 
as an unfortunate situation. You will find, I think, that these 
people are willing to take a beating, but they don't want to take 
an unnecessary or unfair beating. One of the purposes in holding 
these hearings is to inform the public of what you are doing. 

Mr. Nelson. In that connection, I have repeatedly said that the 
American public and the American businessman may submit to 
almost any kind of sacrifice if, first, they think it is necessary, 
and second, they feel that all are being treated alike. Those, to 
me, are the fundamentals that will guide the American people in 
making any sacrifice that may be necessary to reach any objective 
in which the}' believe. 

The Chairman. The time element is pressing us, and is aggravat- 
ing the problem. From your experience, you know probably more 
about it than anyone in this country. It took Hitler 7 years to 
prepare for war. Do you think we are doing about as well for the 
first 2 years as he did ? 


Mr. Nelson. I think we have done better. I don't think there is 
any doubt about that, and I would refer you to the record. We 
are building an airplane industry in a year that is bigger than the 
automobile industry, which took years to build up; we are build- 
ing a new tank industry which, before it gets through, ^yill be 
about as big as the automobile industry; and we are building an 
entirely new industry for the making of all kinds of guns and 
other implements of" war. I think a great deal of progress has 
been made. However, we can't be satisfied with it, because a great 
deal more is necessary. It is going to take a great deal more if 
we are going to accomplish our objective. 

The Chairman. Mr. Cooke estimates that only 40 percent of 
our tool capacity is being utilized at the present.' What plans 
has S. P. A. B. developed to use the remaining 60 percent? 

Mr. Nelson. We haven't evolved a plan yet. The whole machine- 
tool situation is being surveyed by O. P. M., from two angles: 
First, with the object of increasing the production of machine tools, 
and second, to bring about a greater utilization of the machnie 
tools that we have. I can't say at the moment that the O. P. M. 
study has reached a stage that "would give us the information that 
you have asked for. 

The Chairman. Mr. Cooke also states that it would be possible to 
increase our industrial efficiency by pooling the techniques of various 
individual firms.^ Has anything been done along this line? 

Mr. Nelson. Yes, sir; but not as much as should have been done. 
Techniques are being pooled to a considerable extent, although not on 
an orderly and well-planned basis. This is done through meetmgs of 

^ See p. 8050. 

' See pp. S048, 8040. 


the industry, for passing on such techniques. I believe Mr. Cooke is 
right when he says we haven't done all we can in that direction. 

The Chairman. In his statement he says that from an English view- 
point, large plants are easier to convert than small plants.^ Can you 
give the committee some idea of how many small plants have been 
converted to defense production? 

Mr. Nelson. No. sir : I have no figures on that. We could eet them 
lor you." 

The Chairman. I would appreciate that information. Thank you 
very much, Mr. Nelson. You have made a splendid presentation, and 
I know it will be valuable for the record of this committee. 

Mr. Nelson. It is always a pleasure to appear before you. 

The Chairman. We shall now hear the panel of industrial engineers. 


The Chairman. Will the following gentlemen please come up and 
take chairs here? Messrs. Cooke, Henry, Person, and Taub. 

Gentlemen, the committee is very glad to have.3'ou here today, as 
experts qualified to discuss the production problems of the defense 
program, and especially the problems of converting industry' for all- 
out production of defense goods. 

During a hearing we held in Detroit a month ago, unemployment 
and threatened out-migration due to the curtailment of the output of 
automobiles were discussed. We were told there that the converti- 
bility of manufncturing plant was closely connected with questions 
of migration. We propose to ask each of you, in turn — Dr. Person, 
Mr. Cooke, Mr. Henry, and Mr. Taub — a few questions individually 
and then we will make the questions general, and give you an oppor- 
tunity to amplify each other's answers. 


The Chairman. Mr. Cooke, I wonder if you would be kind enough 
to introduce the panel, stating names and positions. 

Mr. CooKE. To my left is Mr. S. T. Henry, assistant to the president 
of the McGraw-Hill Co. Next to him is Mr. Alex Taub, one of my 
colleagues in the Labor Division of O. P. M. Then there is Dr. 
Harlow S. Person, an economist, of Ncav York, and now consulting 
economist to the Rural Electrification Administration. 

The Chairman. And your own position, Mr. Cooke ? 

Mr. Cooke. I am chairman of the Shipbuilding Stabilization Com- 
mittee and technical consultant to Mr. Hillman, head of the Labor 
Division of O. P. M. 

1 See p. 8044. 

2 The committee, sutispquent to the hearins. was informed by the office of the Supply 
Priorities, and Allocations Board that this information was being gathered, but that the 
report would not be completed in time for publication in the present volume. When 
received it will be published as an exhibit in a later volume of these hearings. 


The Chairman. I should like to say to you gentlemen that you have 
filed with the committee some very valuable statements, and we will 
have them set forth in full in our record. 

Dr. Person, I shall begin with your paper. 

(The paper referred to above is as follows :) 


Summing up the problem before your committee, I take it that defense mi- 
gration is a result, iirst, of giving defense contracts to large coueerns in in- 
dustrial centers rather than distributing them in accordance with existing 
labor supplies and productive capacities ; second, of the inability of local plants 
in the absence of defense orders to secure supplies of critical materials to 
continue normal operations ; and third, of the desire of workers in lesser 
centers to take advantage of the new defense jobs created in the larger 
industrial ceqters. 

The problem of defense migration is not an isolated problem suscep'^ible 
of direct solution. Looked at in large perspective it is a consequence of in- 
ability to organize and implement a war economy within the frame of "business 
as usual." It is a phase of the over-all problem of effective organization for the 
production of defense and war materiel. The solution lies along the following 
lines : First, speedy arrangements for all-out or max'mum production for de- 
fense; second, maximum eflSciency in implementing these arrangements; third, 
a planned optimum balancing of production for defense and production for 
civilian needs ; in short, by bringing to bear on the organization of a national 
plant for production of war materiel that abundant production and engineering 
skill so manifest in private enterprise in the United States. 

In expressing more detailed views it must be recognized that I have had no 
responsibility related to the problem that puts me in a position to answer 
questions calling for statistical replies; such as questions concerning the extent 
of the facilities for defense production in the United States and their geo- 
graphical distribution.^ There are defense agencies that have been in exist- 
ence long enough to have made such an inventory, and they should be con- 
sulted. If an adequate inventory has not yet been made, it can still be made 
with rapidity if certain existing agencies with facilities for making such 
inventories are called on, and their facilities are effectively organized for the 
purpose. I have in mind, of course, not only Government agencies, but also 
national organizations of industrialists and of organized labor, the railroads, 
and other private agencies in a position to assemble data rapidly on a 
national scale. 

During the past decade the Nazis have displayed amazing effactiveness in 
organizing for military aggression and for provision of the necpssary materiel. 
They are showing aiuazing effectiveness in integrating the facilities of occupied 
countries into their own system of prov'sion of materiel. In respect of their 
dominating purpose, eflSciency of the pertinent organization and procedures is 
somethirg to which the world has never before seen anything comparable. 
This makes the problem of the resisting democracies correspondingly difficult. 

Great Britain also, within the 2 years since she perceived that her very 
existence is at stake, has developed a notable efficiency in organizing for war 
and for the procurement of war materiel. And — of outstanding significance — 

^ In id'^ntical letters .sent to the four memliers of the panel prior to the hearing, the 
committee addre.ssed the followii^g set of questions as a means of suggesting some of the 
subjects on A\hiph its members wished to obtain views of the witnesses : 

1. Has sufficient emplinsis in tlie national-defense program thus far been put on the con- 

version for defense production of existing plant facilities? 

2. How can we, consistent with defense needs, more fully utilize existing production 


3. Where does excess capacity exist which should be utilized? 

4. From a technical viewpoint what nondefense industries can be most readily converted? 

5. What are the technical difficulties of converting different kinds of industries and different 

sizes of plants? 

6. Are there significant differences as bet^""een large and small plants, large and small enter- 

prises, mass prodtiction. and less specialized plants? 

7. How can we more fully utilize labor displaced as a result of material shortages and the 

allocation program, and the already existing labor reserve? 


Great Britain is succeeding in doing this without impairment of the funda- 
mental qualities of democracy. I shall have more observations to make along 
this line before I conclude this statement. 


The most significant thing to me is that the United States possesses capacities 
for planning and organization in larger measure than does either of the nations 
to which I have referred ; and the most appalling thing is that these capacities 
have been drawn on to so limited an extent. The most effective technique of 
organizing and planning for achievement of any predetermined purpose had its 
origin in the United States, was adopted by private industry in tlie United 
St tes hmg before it was adopted in other countries, has been integrated into 
our ways of doing things more extensively and more deeply than in any other 
country, and has in consequence developed more technicians skilled in manage- 
ment than in any other country. The United States is not only the country of 
origin of mass production — of large scale, specialized production on single- 
purpo.'-e machines — but it is the country of origin and of development of the 
most effective techniqtie of production in middle-size and small plants — pro- 
ducers of items of variety on multiple-purpose machines. The urgent prob'em 
cf rapid production of materiel for defense and for war confronting the United 
States is one of bringing these two superiorities into harmonious, effective 
relatiinship ; of securing maximinn advantage of the flexibility, adaptability, 
and spetd of adjustment of the thousands of small plants of multiple-purpose 
machines to start the flow of production of lu'gently needed items immediately, 
>vhile we are waiting for the huge mass production plants of sing e-purpose 
machines, less flexible and less speedily adaptable, to bring their great capaci- 
ties to bear on the problem. The thousands of plants of the 75- and 155 milli- 
meter class can win a lot of production victories while tracks are being laid 
to bring the ponderous 16-inch plants into action. 

The superior capacity of the United States for technical organization and 
management of production is distributed among 100,000 production executives 
and engineers in middle-size and small plants, and we have not yet succeeded 
in making effective arrangements for assembling and focusing this capacity 
on tl e urgent production problem. The United States has been a land of such 
magnificent opportunity that promoticm and corporate organization and finance 
have dominated the scene, and the along these lines have become the 
headliners of business. Consequently in time of emergency calling for experi- 
ence in industrial functions we instinctively turn to these business headliners to 
take on the problem of production on a heretofore unheard-of national scale, 
but in so doing we are not drawing on the reservoir of genuine technical 
capacity for organization and production. 

The radical, the effective, the urgent step is still to be taken. There is still 
to be set up an agency, with the authority of common consent as well as of law, 
and with the competence of technical knowledge, whose task will be to organize 
all the plants of the Nation into one great coordinated national plant along the 
same lines in which the best-managed medium-sized plants are now organized.- 
.\Vhile the national plant will be vast in its reach, and the component elements 
more varied and complicated, the principles and the technique to be applied are 
identical with those involved in efficient individual plants. Whole plants and 
their facilities become the primary factors of coordination, instead of machines; 
yet within the frame of coordination of each component plant, coordination 
of machines and processes in detail is effected even more efficiently. 

We have in the United States learned to do things in this way up to the 
scale of the private multiple-plant corporation. Now we must do them on 
the scale of a national plant. The multiple-plant corporation has learned how 
to get results effi 'iently and dependably by a harmonizing of centralization 
and decentralization. The people acting through the Government must do 
the larger job of effective national defense by a similar harmonizing of cen- 
tralization au'l decentralization on a national scale. It can be done if suitable 
technical abilities are wisely drafted to effect the organization and formulate 
the procednres. 

This harmonizing of centralization and decentralization is of major im- 
portance. The impulse that assures the directing of all efforts in a coordinated 
manner toward a common end flows from the center out ; the impulses that 
assure the common end through the effectiveness of a million and one detailed 
acts have their origin in and are applied at the points of detailed action. 



Let US look for a moment at the multiple-plant corporation. At the central 
general othce are determined the major objective, the component objectives, 
general policies of operations, allocations of fixed and working capital, of 
materials, and so on. For each component plant is developed a detined ob- 
jective — qualitative and quantitative — and a specific schedule. A frame of 
purposes, policies, facilities, and schedules is passed along to each component 
pjanr, but as long as each plant meets its schedules the general office does 
not attempt to regulate the operations of a plant within this frame. 

The managing oflSce of a plant receives this frame of directives and within 
it develoi's a consistent schedule of detailed operations for the plant as a 
whole, and a component consistent schedule of operations for each department 
of the plant. Each of these is a frame of component purposes, policies, facili- 
ties, and schedules for a department. As long as each department meets its 
schedules the general office of the plant does not attempt to manage the opera- 
tions of a department within the frame. 

A department may consist of shops or sections. The staff of a depart- 
ment manager studies the frame of directives received from the general office 
of the plant, and in turn within that frame develops a consistent schedule of 
detailed operations ror eacn suop or section. Then within this frame of 
directives the shop or section proceeds to manage itself. 

This system of frame within frame of directives is what effects harmoni- 
zation of centralization and decentralization ; it makes possible the two great 
componeuTs of effective results: First, efficiency of individual acts because 
their character is decided at the points of the acts ; second, assurance that the 
detailed acts are directea towaru a common purpose because the what, when, 
where, and how much involved in an act have been designed at a common 
center. From a center comes the maps, as it were, that guide the great caval- 
cade of detailed acts toward a common goal; but each operation in detail in 
the great cavalcade is performed in accordance with the judgment and skill 
of the local operative. 

This arrangement for harmonizing centralization and decentralization is the 
only dependable one that human ingenuity has devised for successful conduct 
of operations on a large scale. It is the essence of effective military strategy, 
tactics, and operations, just as it is the essence of effective industrial organi- 
zation and management. As I have suggested, our urgent national problem 
now is to effect an organization for production of defense and war materiel on 
the grand scale of a national plant of integrated individual plants. 

It will require frame within frame of directives from a national center 
and through regional centers of planning and framing directives; but it will 
require also arrangements for the maximum of coordinated local autonomy 
at every work center in the system. 


Let US be more concrete. I see our urgent problem as follows: The most 
rapid maximum production of defense and war materiel, with the least possible 
disturbance of peacetime livelihood activities. This does not mean the main- 
tenance of business as usual with a residual production of as much war ma- 
teriel as possible under that condition. It means just the opposite; it means 
the conversion to defense and war production of every suitable and necessary 
production facility, large and small, in lesser cities and villages and in rural 
areas as well as in great industrial centers. It makes production for civilian 
purposes the residual estate. But there must be no gypping in determining 
this residual estate; defense and war claims should go just as far as precisely 
calculated requirements indicate, and no farther; and production for civilian 
needs should be as effectively organized and conducttMl within its area as is 
defense and war pi-oduction within its area. I should like to make a para- 
doxical observation here : There is likely to be more disturbance of the civilian 
economy if effort is made to preserve it by curtailing the defense and war econ- 
omy, than there will be if the defense and war economy is given all the facilities 
it requires and conversion of plants to its needs is made completely and expe- 
ditiously to the extent required. Defense migration i-esulting from defense 
unemployment will be the greater if halfway measures are pursued; and will 
more likely be at a minimum if production for defense and war is all-out and" 


vigorous, and the activities widely decentralized as in a strong normal economy. 

Having in mind our statement of the urgent problem, I see in imagination 
although with hazy outlines something like the following : 

A supreme board of diplomatic-military strategy that plans a line of com- 
bined diplomatic and military activity for a year or two ahead. From this 
over-all plan there passes to the military establishments a frame of directives 
for military preparedness and action. 

Within this frame each military establishment calculates iti-i minimum 
essential requirements in detail and on a time schedule. This schedule of 
requirements then becomes a directive for organizing the Nation's production 
facilities so as to meet the military needs, and also so as to determine the 
residual capacity available for civilian needs and to organize this as effec- 
tively as the military procurement sector is organized. 


The formal procurement of military materiel should be lodged in the military 
establishments. But at this point serious problems arise. Military establish- 
ments are apparently by nature not adequate for a large-scale emergency 
procurement task. Skilled in technical military matters they are not skilled 
in business matters. Especially in view of the fact that in time of emergency 
the problem is not one merely of procurement, i. e., placing orders in an 
open market, but one of inventorying the production facilities of a nation, 
organizing for rapid achievement of maximum production, and then 
following up the national production activities for achievement of maximum 
production, just as an individual private enterprise pursues such follow-up 
activities. The military establishments appear to have no basis in experience 
for competent inventorying of national facilities and for organizing and follow- 
ing up production proces.'^es on a national scale ; yet it appears desirable that 
these establishments actually execute the orders in order to maintain a func- 
tion that has continuity through peace into war and back into peace condi- 
tions. To meet. this condition there appear to be two alternatives: 

1. Enlargement of the military establishments by incorporating in them an 
adequate organization of civilian personnel exijerienced and skilled in the 
engineering and the direction of production. The technical military activities 
of the military establishments for which there is a shortage of trained officers, 
and the design of materiel, the preparation of specifications and the sched- 
uling of requirements on a quantity and time basis, would be reserved to the 
regular military personnel. The inventorying of national production facilities, 
organization of these into an effective national plant for defense production, 
negotiation and execution of contracts, follow-up of contracts and production 
processes, would be a re.sponsibility of that part of the military organization 
made up of the civilian personnel selected for the purpose. This civilian part 
should be independent of the military part in its procurement activities 
except as to the tie-in at the top. In tliis manner procurement and its follow-up 
would be conducted by a personnel more experienced and competent in that 
function than the military personnel, yet the contracts would nominally be 
let by and in the name of the military establishment. 

2. The other alternative would be to set up the procurement and accompany- 
ing production follow-up in an organization independent of the military estab- 
lishments but as a procuring agency in accordance with their requirement 
schedules, assign to it the responsibility of inventorying and organizing the 
Nation's production facilities, negotiating contracts up to the point of letting 
them, and of following up the production processes and maintenance of a 
national flow of military materiel that meets the military schedules. The 
formal execution of the contracts as developed to the point of execution could 
be reserved to the military establishments. 

TTie purpose of thus providing a special organization of competent produc- 
tion engineers and managers within or adjusted to the military establishments, 
is to make available to our defense efforts, as is not now adequately done, that 
fund of production management and engineering ability possessed by the 
United States in greater abundance than by any other nation. Given a clean- 
cut assignment and authority commensurate with the responsibility, the pro- 
duction engineering skill of the Nation could organize the national plant and 
establish a national flow of specified materiel comparable, although on a 
larger scale, with the regularity of the flow of work in the best managed 
private enterprises. The technique would be identical in essential features. 


but with a larger number of frames of coordinating directives passing out from 
center to center to where the details of effective execution are organized and 


Given a clean-cut assignment and authority commensurate with the responsi- 
bility—that is the condition precedent. That is the condition precedent to 
organization by a democracy of its production facilities adequate to meet on 
superior terms and stop once and for all the onslaughts of militarily efficient 
international higliwaymen. The Nazis liave made themselves amazingly efla- 
cient along certain pertinent lines at the sacrifice of every vestige of democracy. 
The British are achieving a reasonable efficiency within the frame of democ- 
racy and without sacrificing the essential of democracy, but at immense pres- 
ent sacrifice of individual privileges and great present restriction of indi- 
vidual opportunities. The Nazis have challenged the efficiency of democracies 
and in so doing have challenged their very existence. They have been prepar- 
ing for their depredations for a decade. They have selected, tested, discarded, 
reselected, and retested personnel until they have a highly efficient operating 
organization for the particular purpose. We have hardly begun the building 
of an efficient machine by such measures. They have inventoried and brought 
under control not only the resources of Germany but also those of occupied 
territories. We have hardly begun inventorying our resources. They gave 
up "business as usual" on an individualistic basis long since, and have replaced 
it with blocked business in support of the particular aggressive purpose. 
Among us the sentiment of business as usual is still strong. They have 
eliminated personal interests that conflict with the national purpose ; they 
have eliminated personal ambitions that are inconsistent with the national 
purpose; but these things still hamper us. 

Organization for cfl5?iency in overcoming onslaughts of international high- 
waymen, without sacrificing democracy, means that we must learn to distinguish 
between the fundamentals of democracy and the appurtenances of democracy. 
For a time we shall have to sacrifice the latter. It is quite possible, however, 
that if we preserve the fundamentals even at the sacrifice for a time of the 
appurtenances, of which some are obsolete, the new appurtenances that will 
inevitably develop after the emergency task is done will represent a stronger 
and more desirable democracy. 

There was never a more democratic grouping of people than on the historic 
frontier of the United States. When Indian uprisings led to attacks on set- 
tlers and frontier communities these ancestors of ours organized their de- 
mocracies for effective action. They knew the simple technical requirements and 
they organized them. They chose leadei's especially, i. e., technically, com- 
petent to direct the particular job ; formulated rough rules, regulations, and 
procedures; each man was assigned his part; and individually they obeyed the 
requirements of the situation and the directions of their leaders. It was 
similar in the days of vigilance committees, and posses to destroy cattle rustling. 
And when all these jobs were completed democracy had not been sacrificed ; 
it was stronger than ever. 

The problem confronting us today is identical in essence but vaster in scope 
and more complicated in detail. But the necessary procedure is in essence the 
same: draft technical leaders; organize for effective action; establish suitable 
procedures; obey orders; each for all and no especial privilege for any indi- 
vidual. The head of a small unsung enterprise (because he knows how to plan 
and produce) may become a leader, and the president of the largest corpora- 
tion (whose ability is in the field of promotion) may become a simple private. 
Such circumstances arise out of the nature of the particular urgent task. 
After the emergency is over they can return to their accustomed activities. 
But during the organizing for and activities of the emergency it must be 


There is one reassuring aspect of the technical lines of action suggested in 
this statement. Organization of the national plant for effective action in meet- 
ing the emergency, if along the lines of the best technique of production en- 
gineers and managers in individual plants, will be a positive move in the 
direction of a strengthened democracy. The best in technical management of 


private enterprise has been developed on the basis of harmonious employer- 
employee relations — on more and more democracy in the shop. It has involved 
workers' consent, workers' participation in determination of standard pro- 
cedures and schedules, in many instances consultation with workers on problems 
in the field of major policies. 

Defense migration is coming to be more and more the result of a failure to 
distribute defense orders widely among the many thousands of plants of the 
country. The problem is to be met by so distributing orders as to bring every 
possible plant — small and middle-size as well as large— into a great national 
plant engaged in the production of defense and war materiel. This can be 
achieved only, on the one hand, by an all-out program of production for defense 
and, on the other hand, by bringing to bear on the organization of the national 
plant that abundant engineering and production skill that has been so manifest 
in private enterprise. 

Viewed from a still larger perspective, solution of the defense migration 
problem through solution of the defense and war production problem along 
the lines here suggested, will constitute a considerable step in solution of the 
post-defense problem. Ghost towns will have been revivified ; new ghost towns 
will not have been created ; the post-defense economy will rest on the basis of 
a highly productive but widely decentralized national industrial plant. 


The Chairman. Dr. Person, you say in your paper that — 

the Nazis have challenged the efficiency of the democracies and in so doing have 
challenged their very existence. 

In another place you say that — 

our failure to utilize our productive capacity is appalling. 

To what do you attribute that faihire? 

Dr. Person. Fundamentally, I should attribute it to the difficulty 
and slowness of a democracy organizing itself for such action. 

The Chairman. You also state in your paper: 

The radical, the effective, the urgent step is still to be taken. There is still to 
be set up an agency with the support of common consent as well as at law and 
with the competence of tactical knowledge whose task will be to organize all 
the plants of the Nation into one great coordinated national plant along the 
same lines by which the best managed medium-sized plants are now organized. 

Will you explain that a little more fully? 

Dr. Per-ox. If I may be permitted to"refer to the first statement 
made by Mr. Nelson, I agree with him completely that all planning 
for action must start with a knowledge of what "has to be done and 
what is wanted, and that the absence of that knowledge is always a 
limitation. But it seems to me equally important that some agency be 
concerned with organizing the facilities in advance for meeting the 
need as soon as its existence is known. 

Now, so far as I can gather as an outsider looking in on prepared- 
ness, it seems to me that we have been dilatory in inventorying the 
production facilities of the country, plant by plant and machine by 
machine, and having this knowledge ready for immediate and effec- 
tive use as soon as details of what is wanted are known. And my 
observation of organization and management in general would require 
that there be a very definite functionalized and specialized agency 
for this purpose, made up primarily of people concerned with organi- 

60396 — 41— pt. 20 3 


zation — that is, experienced in organization, but also experienced in 
classifying and appraising plants and tools and machines. To sura 
up, we must have a functionalized and specialized agency made up 
of personnel with a very particular combination of information and 


The Chairman. In other words, you feel that in the allocation of 
materials, whether for defense or nondefense, we will never know how 
to proceed if we do not first have an inventory. 

Dr. Person. I agree with you. 

The Chairman. That was also brought out in the Detroit hearing. 

Dr. Person. We must know our materials, our manufacturing fa- 
cilities, and our requirements. Knowledge of those three things is the 
very basis of good management, of effective, economical management, 
and management with a tempo to it. 

The Chairman. To what extent do you think S. P. A. B. fails to 
meet that problem ? 

Dr. Person. I am not in a position to answer any such question in 
detail, Mr. Chairman. It is a quantitative question, and I cannot 
answer it quantitatively. My general conclusion or judgment is based 
on the information one gets from the press, and I have a positive 
feeling that we haven't gone as far or as rapidly as is technically 

I am not saying, Mr. Chairman, that there may not have been — 
what shall we call them? — psychological circumstances that make im- 
possible at the present moment an achievement which is technically 
or theoretically possible. In my preliminary statement, Mr. Chair- 
man, I had in mind rather the expression of an all-out view of the 
technical waj^s in which I think procurement for defense should be 
effected, without any particular implications as to the extent to which 
we had progressed in this all-out method. My idea was that perhaps 
I might offer to the committee some means of judging for itself how 
far we had gone, on the basis of testimony from other witnesses who 
are actually concerned with defense activities, and know what has 
been done. 

The Chairman. Of course, you realize, like the rest of us, that this 
vast national-defense program has come upon us all at once. 

Now, at another point in your paper you say : 

Military establishments are apparently by nature not adequate for a large-scale 
emergency procurement task. Skilled in technical military matters, they are not 
skilled in business matters. 

You continue : 

The military establishment appears to have no basis in experience for com- 
petent inventorying of national facilities and for organizing and following up 
production processes on a national scale. 

Would you like to enlarge on that in any way? I think that is 
very interesting. 

Dr. Person. I think it is quite comprehensive as it stands. My 
judgment in that respect is based considerably on experience during 
the First World War, when I served as an officer in the Ordnance 


Department, and later in a special unit attached to the office of the 
Under Secretary of War, concerned primarily with inspecting the 
organization and procurement procedures of the various supply divi- 
sions of the Army, Later, the work of this special unit apparently 
satisfied the Under Secretary of War to a degree that led him to 
make it at that time a part of the Inspector General's Department. 
My judgment is based on that experience even more than on any 
present observation of a casual nature, or on contacts of a casual 


I think the military organizations of the United States are ex- 
traordinarily efficient and expert in technical military matters. But 
I think they look upon procurement as simply a matter of placing 
the order — which is largely what their procurement procedure con- 
sists of in time of peace. It isn't necessary in time of peace to go 
beyond the placing of an order, particularly when speed is not of 
consequence and reliance can be placed on the manufacturer or other 
sources of suppl3^ In time of war, or of intense activity for defense 
in facing the possibility of war, procurement must be looked on as a 
task that reaches far beyond the mere making of a contract with a 
supplier. It must involve inspecting the progress the supplier makes 
in manufacture, aiding him in methods of organization so far as is 
possible, and providing him with the necessary schedules and 

This extension of the responsibility of procurement beyond mere 
contracting would in my judgment constitute three- or four- fifths 
of the area of responsibility and activity in connection with pro- 
curement and would be responsible for, let us say, 90 percent of the 
development of tempo in procurement. 

Now, I think there is a difference between military establish- 
ments in time of peace and military establishments in time of war 
or in periods of war emergency. But looking at them all together, 
in the large, their general idea of procurement seems to end with the 
making of a contract with a supplier, and in trusting to the natural 
processes of business to take care of delivery. However, in an emer- 
gency where speed is a factor, between this contract and delivery is 
an area of opportunity for an immense amount of aid to the supplier 
that will increase the tempo and also the precision of delivery. 

The Chairman. Have you any suggestions as to how to make that 
improvement in the present situation? 

Dr. Person. According to Mr. Nelson's testimony, there is adequate- 
authority in existing agencies, and consequently I don't know that I 
want to make any suggestions. I have made my statement, describing, 
what I consider to be the ideal set-up for the purpose. 

The Chairman. I am very much interested in your statement that 
there is likely to be — 

more disturbance of the civilian economy if effort is made to preserve it by cur- 
tailing the defense and war economy. 

Dr. Person. My point of view is very positively for an all-out, com- 
plete organization for defense, and an all-out, complete demand on 
the facilities necessary for effective defense, leaving production for 
civilian demands, as I put it, as a residual estate in the whole situation. 


But I believe that after the defense demands are known in detail and 
the capacities of the country, including the materials, are inventoried 
in detail, and after these capacities and materials are organized and 
arranged for meeting the defense requirements, the precise knowledge 
of facilities and materials left over will permit them then to be 
highly organized, with a new and advanced tempo of production that 
will go a very long way toward meeting basic civilian needs. Pro- 
duction for civilian needs can then be organized with a simplification 
and tempo that will take care of those needs in very large measure. 
Production for civilian defense should, under such circumstances, be 
organized and speeded up just as is that for defense or war — ^be not 
left to chance. Further, I believe that the exactness of this knowledge 
of the residual estate will avert that confusion and uncertainty that 
exist in the absence of such knowledge. 

In other words, an all-out defense program, with all its claims 
strictly defined and recognized, will leave a positive knowledge of 
what can be done in respect to civilian needs and the whole problem 
of adjustment of civilian industry to the needs of defense will be less 
upsetting and disconcerting. When individual concerns have to set 
about insuring themselves against making mistakes in the face of lack 
of information, they often go further than it is necessary to go. 

The Chairman. In other words, if we had definite knowledge as to 
the amount of steel produced in this country, say 100,000,000 tons, we 
could find out what the Army and Navy need ; then if we knew we had 
50,000,000 tons left, it should not be very difficult to apportion or allo- 
cate that 50,000,000 tons impartially and equitably for nondef ense. 

Dr, Person. And with that impartiality recognized by the people. 

The Chairman. The people would know. They won't kick if they 
are getting an even break. That is substantially what we were able 
to observe in Detroit, where, if the big auto companies had been 
converted to defense, they would have had an assurance of materials 
and been able to avoid sudden large-scale lay-offs. Do you think 
that is correct? 

Dr. Person. I don't know the facts of the industry sufficiently in 
detail to say that it is correct. There is a strong presumption in my 
mind that it is correct. 

The Chair:man. Thank you very much, Dr. Person. Congress- 
man Sparkman will now interrogate Mr. Cooke. 

Mr. Sparkman. Mr. Cooke, I have read your statement with 
much interest and I think it is a very fine statement, one that pre- 
sents a clear picture with much logic. 

(The statement referred to above is as follows:) 

D. C. 

Before beginning my testimony may I express to this committee my apprecia- 
tion of the altogether helpful way in which it has assembled so much data of 
special interest to those of us doing our bit to put the national-defense effort 
on an effective basis. Common sense and the experience abroad both suggest 
that the minimum of migration is consistent with the maximum of defense 

Also before taking up the subject of the more effective utilization of existing 
production facilities, which is the special topic for today's hearing, may I say 


that as Chairman of the Shipbuilding Stabilization Committee I have come to 
feel that the stabilization idea as first suggested by Mr. Sidney Hillman and 
later worked out by our committee, so that it today measurably controls the 
actions of over 300,000 workers in American shipyards, is the route by which 
much migration will be avoided. The zone standards set up for the four na- 
tional water fronts have already inspired similar stabilization movements both 
in building construction and aircraft building. These standards were mutually 
arrived at by the three factors who were parties to them ; i. e., the Government, 
the workers, and the proprietors of a himdred or more shipyards who are now 
working almost exclusively on Government orders. The less we do by Govern- 
ment fiat and the more our moves are the willing and joint action of the 
parties affected, the better it will be for our democratic ideals. I transmit 
herewith copies of the four zone standards as drafted for the west coast, east 
coast, Great Lakes, and Gulf water fronts. I will be glad to furnish this com- 
mittee within a few days copies of a forthcoming brochure. Ships for Freedom, 
in which our methods and conclusions are quite fully described. 

Although I have been in Washington since last October, first with the 
National Defense Commission and then with the Office of Production Manage- 
ment, not since early in this year have I had any public assignment which 
would enable me to speak in any factual or statistical sense of the progress 
made or of the details of problems being encountered in the drive to bring 
a larger percentage of the smaller manufacturing plants into the defense 
program — a movement which has in this country developed under the name 
of "farming out," in England under the name of "bits and pieces" or "odds and 
sorts." I was one of those who a year and more ago felt, as I still feel, that 
the defense effort of the United States would have to be intensified to a 
point where all of our available tools, all of our managerial skill, all of our 
labor was utilized — and that the quicker this was done the better. 


Mr. Hillman, then a member of the National Defense Commission, was con- 
cerned about finding work for those in distressed areas. I therefore undertook, 
within the Labor Division, to make reconnaissance studies of so-called ghost 
towns and ghost areas and of the ways in which both abroad and in this 
country those who were pioneering had found it possible to utilize idle labor 
and idle machines on defense work. Last winter and spring the Labor 
Division of the Ofiice of Production Management issued a number of "farming- 
out bulletins" and in every way in its power sought to further the education 
both of persons in industry and of those in Government on what had been 
and could be done in the way of spreading defense work. In the course of 
time an administrative service was set up in the Office of Production Manage- 
ment for the express purpose of furthering this emergency type of subcon- 
tracting. Now this has been reorganized as the Division of' Contract Dis- 
tribution under Mr. Floyd B. Odium. 

The early work of the Labor Division in furtherance of farming out has 
been described in testimony of Mr. Hillman before tliis committee, and the 
main results of our reconnaissance studies are available in the bulletins to 
which reference has been made. Not having had any direct responsibility in 
recent months for the efforts actually to distribute defense work more widely, 
I do not feel myself in a position to make comments on the organization of 
this work as it has been prosecuted by the several agencies of Government 
having charge. I shall devote my testimony today, therefore, not to speaking 
again of matters which have before been brought to tlie attention of the 
committee, but to a discussion of certain points affecting general method 
which I feel to be essential to the effective conduct of the defense program. 

First, a word on the questions which the committee has specifically asked 
the panel.^ Some of these can be readily answered. There can be no question but 
that thus far insufficient attention has been paid to the conversion for defense 
production of existing plant facilities. In reply to the query as to where there 
is excess capacity which should be utilized the answer is "almost everywhere." 
For even in those plants which are turning out all the defense goods of a given 
type that they can produce, there are usually individual machines which are 
idle a large part of the time. And there are very few plants, indeed, which 
operate 24 hours a day, 6 or 7 days a week, with anything like as much of 

1 See footnot?, p. 8034. 


their capacity utilized in the second and third shifts — especially the night 
shift — as competent observers believe possible. A report on the hours vs^orked 
in various defense industries in June 1941 contained in the most recent pub- 
lication of the Bureau of Labor Statistics in the series Utilization of Plant 
Facilities in Selected Manufacturing Industries Under the National Defense 
Program showed 70 percent of the employees in 299 selected plants on the first 


The inquiry as to what nondefense plants can from a technical viewpoint be 
most readily converted is easily answered in part. Since the great need is for 
precision work, and especially for machines and tools with which to manufacture 
the defense products themselves, the tool-room facilities in almost every type of 
industry can be used instantly. There are shortages reported in classes of work 
such as drop forgings and in certain types of processing such as heat treating 
where the required facilities might be carefully requisitioned not by plants but 
on a Nation-wide basis. Plants that do jobbing work, which are not specialized 
but could repair or make almost anything — especially where machining is 
required — could be used in any number. This group includes large numbers of 
small plants as well as those of intermediate and large size. The greatest need 
is for plants accustomed to precision work, but other plants can be upgraded. 
In general, I think we may say that in the kind of all-out production which cir- 
cumstances now require it should be possible to use practically every machine tool 
in the country — reconditioned, or as they stand — excepting perhaps only those 
relatively few which were designed for a highly specialized purpose. 

Questions as to the technical problems involved in converting plants in different 
industries and of different sizes are such that I personally could not answer them 
at all adequately even if time permitted. Among the industries which are now ad- 
versely affected" by diversion of material to defense use there must be a consider- 
able number of plants whose operations are so different from those which are now 
most needed that it is hopeless to consider their conversion. Among those which 
can be converted the problem will be greatest in the case of those plants whose 
equipment is not in good condition and whose workmen and managers are not 
accustomed to close work— although the difficulties here are usually exaggerated. 

Measured in terms of ratio of results obtained to etfort expended, it will, gen- 
erally speaking, be more of a problem to convert small than large plants, partly 
because in a given case the results obtained will be smaller, and partly because 
the small plant is likely not to be so well equipped with management personnel 
capable of helping in making the change. This means that in many cases, though 
by no means all, the cost per unit will be larger. But this applies also, in only 
slightly less degree, to the conversion of large plants, and is a situation which 
must be definitely recognized in any all-out defense program. When it comes to 
converting old equipment to defense production, the ability to do good tooling is 
more important than the character of the machines themselves. And it may be 
said of small plants that, though the men who run them may not know much 
about planning, they are, generally speaking, intelligent and resourceful at 

While I am in thorough sympathy with the effort to give employment to those 
who are being forced into idleness, and to save as many threatened businesses as 
possible, I think that this whole problem will in a way take care of itself if we 
turn our first attention, not to making work for those who do not have it but to 
getting done by every possible means the huge volume of defense production 
which we need. In the balance of my remarks I shall speak, therefore, rather 
in terms of how industry may be eifectively mobilized for aid to the Government, 
than of how the Government may aid industry. 

In any analysis of why we do not produce munitions more rapidly and with 
fuller use of all our capacity, first consideration should be given to the state of 
mind and habits of work of many of those in direct charge of procurement — 
(Officials, thnt is, of the War Department, Navy and Maritime Commission. Before 
discussing this I should note that because it has not seemed feasible to declare 
"M" day and thus throw into gear the Army's mobilization plans, certain diffi- 
culties have been encountered which otherwise would have been avoided. I 

1 Tlipse werp plnnts for which comparable data wore available for .Tune 1941 and 
rtonppihpr 1040. For a larspr saniplp of plnnts incliidinsr many for which data were iin- 
avniliiblp thp pprcpntatro on tho first shift was fi4. Spp statistics snbmittpd by thp Actin? 
OoTTiniissionpr of T.nhnr Statistics, p. SI 00. Xpithor croup of plants incliidos thp aif^rnft or 
n'rcrnft cncino infinstri^s which have gone farther than otlier industries in developing 
the second and third shifts. 


have not made any special study of this plan, which was nearly 20 years in the 
making. But I suppose we can admit that the responsibility for not taking full 
advantage of it is pretty well distributed. 

"procurement" versus "production" 

Certainly an important part of our difficulty in speedily building up our 
defense production is psychological and may be most clearly grasped if we 
consider the difference between what lies behind the term "procurement," 
as used by those purchasing goods for the Government, and the term "pro- 
duction" as used in industry. The term "procurement," as its meaning has 
been developed over many years of peacetime purchasing, describes a certain 
type of assignment given to military men to acquaint them with the various 
types of things which are needed by the services and, in a general way, with 
the means used for obtaining them. The term "production" as used by Amer- 
ican manufacturers, by way of contrast, implies volume and tempo. 

One of the difBcuUies in maintaining a virile and effective military estab- 
lishment in a democracy is to find a type of work for the officers to do in 
times of peace which will affoi'd some training for their war-time tasks. Thus, 
the Army engineers are assigned the planning for, and execution of, a large 
part of the rivers and harbors work. In a similar atmosphere of doing some- 
thing not merely for itself btit as a kind of experience, the supply services 
have worked out their procedures for procurement (known among laymen as 
buying or purchasing), which include design, drafting, and specifications, 
advertising for bids, awarding of contracts, inspection and paying for the 
goods. There is no special reason in peacetime for hurry in the delivery of a 
preponderant part of the material so purchased. 

In fact, for much of it — such as for complicated pieces like tanks, anti- 
aircraft guns, and airplanes — a protracted period of purchase is desirable. In 
peacetime such items are normally ordered a few at a time. Prior co 18 
months ago three airplanes was probably the maximum number of fiightiug 
types ordered at one time. These small orders and this drawn-out purchasing 
procedure enabled those in charge to play advantageously with the design, 
even after the item had reached the manufacturing stage. It enabled our 
military men to take advantage of advances in the state of the art and Lo 
incorporate in our designs improvements Which might be reported in the 
practice of foreign countries. These techniques tend to keep peacetime ob- 
solescence at a minimum. But being under the necessity of keeping so many 
highly educated men occupied it was useless to estimate the over-all expense 
and a premium was all but put on drift in the acquisition of supplies. 

In industry — where production, in contrast to "procurement," is the objec- 
tive — there is constant pressure to increase both the volume of flow and the 
speed with which the product comes along. Every improvement in either 
volume or tempo reduces cost. It will naturally take some time for those 
accustomed to the nonchalance of procurement to acquire the attitudes and 
the type of activity required by our present far-flung objectives. 


Another basic psychological handicap under which our munitions production 
operates lies in the attitude of procurement authorities once orders have been 
placed. Under a military system orders as such have a different meaning 
and implication from what they have in nonmilitary life. When a military 
order is issued, the assumption is properly that it will be obeyed implicitly. 
Normally court-martial or some other drastic action follows when military 
orders are disobeyed. Follow-up on a military order is usually considered 
superfluous and only instituted when those in command consider that the 
difficulties of execution are such as may possibly require a quick change in 
plan. In fact in this attitude toward orders once issued lies one of the funda- 
mental differences between any military regime and modern scientific man- 

In industry the assumption is quite to the contrary. The competent manu- 
facturer knows that the vicissitudes normally surrounding the execution of even 
the simplest production program are such that if no safeguards are erected 
some section of the program may not go through or may not go through on time, 
thus jeopardizing perhaps the larger plan on which it may be a key part. And 
so in manufacturing we have many varieties of what is known as follow-up — 


some of them intricate and involved— but all tending to let us know the 
status of the plans being executed and to reveal at the earliest possible moment 
any likelihood of failure, so that the situation may be rectified. 

The attitudes which I have just described are largely responsible, first, for 
the fact that defense orders were awarded en bloc to the comparatively few 
companies which had had experience in munitions production during times of 
peace, and with which the procurement agencies had been accustomed to work ; 
and, second, for the appalling fact that once having placed the stupendous 
orders which Congress had authorized in many instances no adequate measures 
were taken to see that the work was actually done — and within the time limits 
required by the national emergency. 

In my contacts with procurement officers I find that too often there is no 
real understanding of what farming out should mean. There is no clear 
recognition of the difference between normal peacetime subcontracting, that is, 
the purchase of materials or services which under normal manufacturing 
procedures would be obtained in much the same manner, and the emergency 
variety of subcontracting known as farming out in this country and as bits and 
pieces in England. 


In ordinary times there are many parts which every manufacturer finds it 
expedient and perhaps essential to buy from others : Bolts, nuts, springs, 
electric motors, and also parts designed for a particular product but most 
satisfactorily produced by siwcialists in a given line. The manufacturer of 
freight cars buys his brake shoes ; the manufacturer of refrigerators his gadgets. 
The ball bearings for all General Motors cars are made by the New Departure 
Division of this same corporation at Bristol, Conn. 

Since such purchasing of parts from supplying companies is good practice 
in normal times, it should, of course, be carried on also in connection with 
munitions production. But farming out called for by emergency conditions 
must go much further than this. What is needed now is that each manu- 
facturer capable of doing the basic work on a product increase his output by 
having done for him outside of his plant as much as possible of the work 
which he would like to do himself, but which he is not prepared to handle in 
the volume and within the time limits required by the emergency. An increase 
in home plant size or capacity, besides calling for heavy capital expenditures, 
means delay. Farming out can bring much quicker results. 

The late James Reed, Jr., president of Cramp's Shipyard, announced before 
his death a policy of not making anything in the shipyard which could be 
fabricated outside, on the theory that the larger the amount of work done out- 
side, the greater would be the tonnage of ships completed in the yard. 

Another illustration of how farming out may be used to multiply basic 
munitions capacity is afforded by aircraft manufacture. In normal times a 
typical maker of aviation engines would buy his crankshafts already forged 
by some firm, as Wyman Gordon Co. of Worcester, Mass., which specializes in 
the production of such forgings, but he would do the machining, grinding, and 
finishing of the crankshafts in his own plant. Because it has been the usual 
practice right along, the purchase outside of crankshaft forgings, even in the 
greatly augmented volume called for by the defense program, should not be 
regarded as constituting any real extension of farming out. It was, however, 
a true application of farming out when United Aircraft Corporation subcon- 
tracted the finishing of crankshafts to Leland-Gifford Co. of Worcester. As 
a further example, machine tool output could be vastly increased if more 
companies would follow the example set by some of having other companies 
machine or otherwise fabricate many of the parts which they normally make 

If farming out is to be practiced widely enough to affect the defense program 
in any vital way it must be supported wholeheartedly in all the procurement 
activities of the Army, Navy, Maritime Commission, and the Machine Tool 
Section of the Office of Production Management. Where farming out has already 
been used, it has been due largely to the energy and/or acumen of individual 
prime contractors. It has not resulted from any appreciable influence or 
pressure on the part of agencies of government. And yet the gap between 
our defense plan (sixty-six billions) and our defense performance (as measured 
in terms of cash paid out) is widening all the whUe. This is not so much 
because of our failure to produce as because our ideas of what should be done 
are constantly and rapidly expanding. 


In building volume in the flow of munitions, shipping, and even goods for 
citizen use, we must recognize two distinct liiuds of activity : 

(a) Procurement proper, with unremitting pressure for increased output and 
advanced delivery dates ; and 

(6) The concurrent improvement and amplification of manufacturing facilities. 


At the moment seemingly the most telling step as to production is that we 
should change our attitude toward the prime contractor. In getting defense 
worli done we are too prime contractor conscious. When Mr. Hitler wants 
something done he insists on getting help from whoever can give it, whether 
prime contractor, subcontractor, or subsubcontractor. In fact, he issues instruc- 
tions directly to foremen and subordinates. 

With us, deference to prime contractors is an obsession, generated partly 
no doubt by legal considerations respecting responsibility, and partly by fear 
on the part of supply agencies that "interference" might detract from the 
performance of the product, with reluctance to assume the responsibilities 
inherent in the situation. In our desire not to relieve the prime contractor of 
any responsibility under his contract we fall into the error (1) of assuming 
that there is a limit to what we have the right to know as to the progress on 
tlie worli entrusted to him; and (2) of failing to observe our obligation to 
keep continued pressure on a great many contractors to do better than what 
they claim to be their best. Further, we must follow the details of manu- 
facturing progress so as to be reasonably certain of assemblies and sub- 
assemblies on their respective "must" dates. Where the prime contractor does 
not maintain tlie appropriate controls and records to provide this information 
within the plant they should be installed. 

We must know, we must learn to know, the progress being made currently 
by the prime contractor and by each of his subcontractors and by eacli of his 
sub-subcontractors to the end of the story. It is knowledge as to the progress 
being made on ultimate components — small tliough some of them may be — that 
will be of the greatest assistance in putting farming out into practice. Where, 
as in the case of most items of materiel, the ultimate product is complicated 
and consists of a large number of pieces, an adequate follow-up means keeping 
track not only of each element which enters into the product but of each of 
its constituent parts. A single part missing may mean the uselessness of all 
the rest. "In 1918, 2,000,000 shells were ready to ship, but were not shipped 
because they lacked adapters and boosters." 

We are not there yet, but we will rapidly get to the point where our 
attitude will be that expressed in an order of the Emergency Fleet Corporation 
in April 1918, "It is becoming increasingly apparent that Emergency Fleet 
Corporation cannot continue to be observers of the operations within the yards. 
We must do more than audit and inspect. We must encourage and help and, 
where conditions warrant, assume a necessary control — not only assume a 
measure of control but act on it." 


Now having recognized our right to know the day-to-day status of work on 
every part of the defense program, we must record currently, with the details 
coming up from the field, the progress being made on every part of the program, 
graphically and/or statistically and by one common method planned from the 
top. This follow-up work should be carried on through the various branch 
procurement agencies. Unless the form of this progress reporting is outlined 
by those pretty near the top in the scale of authority, it will never have the 
uniformity which will make possible reports intelligible and useful to top 
executives. In any plans adopted, of course, the many excellent devices now 
In use in certain of the district offices will naturally be incorporated. 

In applying pressures aimed at increasing output, advancing delivery dates, 
and — above all — getting out those jobs which would otherwise hold up other 
parts of the program, it is essential that the procurement authorities be repre- 
sented by men of experience and judgment who will know on which contractors 
and on what aspects of the work pressure should be put. Only men with spe- 
cialized experience and training can get the best response from industry. 

Ifc would be fatal for the Office of Production Management to attempt to 
relieve the Army and Navy of their proper managerial responsibility for follow- 
up. In fact, one of the most important services the Office of Production Man- 


agement can render is in encouraging the Army and Navy to execute for 
the benefit of all, this function which is inherently theirs to perform. 

Now a word as to tlie improvement and increase of facilities aspect of our 
national production problem. On the assumption that there is and will con- 
tinue to be more work thau can be done, we need to utilize not only the facilities 
of plants that are organized to assume full responsibility in manufacturing for 
the Government, but we should pool other facilities in such a manner that a 
parent plant not only can keep itself busy but can keep busy a number of 
satellite plants which without coordination and pooling would be unable to 
function. Further, we are finding out, for instance, in York, Pa., that the effec- 
tiveness of pools can be constantly improved by community organization. A York 
community committee canvassed the department stores and other commercial 
establishments to find out which of their employees had formerly worked at a 
trade or had specialized competence that could be used in the manufacturing 
community as two and three shifts become increasingly necessary. 

Pools do not follow any set pattern. In Connecticut a State-wide and in- 
dustry-wide pool of clock makers have for a year or more been working on 
the development of a large-scale plan for manufacturing for time fuzes, first 
on their own and later in cooperation with the War Department. In Canada 
the paper and pulp industry is utilizing its maintenance shops on war work. 
These shops in normal times are operated to maintain machines and equipment 
at the mills. However, this only requires about 48 hours a week — leaving 
machine tools free for other work for some 96 hours in a 6-day week. A special 
committee of the Canadian Pulp & Paper Association known as the Wartime 
Machine Shop Board was formed to coordinate the different mills' shops and 
allocate orders where possible. Working through the board, several primary 
producers have been able to let subcontracts, on certain portions of their orders, 
to the pulp and paper machine shops, thereby speeding completion of the job 
and easing the strain on their own plants. 

Again in Australia a group of some 50 automobile repair shops, both large 
and small, have banded together, under the general control of the Victorian 
Automobile Chamber of Commerce and the special direction of that one garage 
among their number which was best qualified, and undertaken to manufacture 
parts for Bren guns and other tools and munitions. Within 7 weeks after the 
first Government contract had been awarded, thousands of finished parts had 
been turned out, with rejections averaging less than 1 percent. Not only 
metropolitan garages, but those in widely scattered towns are included in the 
group. According to a visiting Australian industrialist, that country, having 
had its imports of machine tools largely cut off, is pressing all its available 
machine tools into 24-hour day service, using them where they are through 
farming-out procedures where possible, otherwise commandeering them. So 
many things which seem impossible until pressure comes can be carried out 100 
percent in the light of new necessity. 

Exhibit A describes the workings of one of the 12 regional boards which 
have been organized to make effective the "bits and pieces" movement in Eng- 
land — as well as aid Britain's defense efforts in other ways. Exhibit B 
is a chart of the organization of the board. Exhibit C shows a form used 
in clearing centers to obtain data on spare machine tool capacity. It will be 
observed that under the 1 regional board 10 clearing centers have been set up. 
Although at the time this description was written these centers had been 
functioning only 8 months, they had already been able, on the one hand, to 
help many firms find work suited to their facilities — especially smaller firms 
who would not otherwise have been able to deal with a whole job — and on the 
other to be useful in meeting the requirements of contractors having work to 
be done, but not the facilities to do it. In fact, recent reports show that these 
centers have now brought the record of requirements met up to 85 percent 
of requests, having started with not much more than 15 percent. 


The research staff of the New School for Social Research, Dr. Alvin John- 
son, director, has with the aid of German scholars recently completed a study 
of the Farming Out of Defense Work ; German Methods and Experiences.^ This 
I'eport states that Germany very early subcontr.-icted government work to co- 
operative groups of craftsmen. Subcontracting within industry proper, that 
is by prime contractors to smaller firms, was looked upon with disfavor in 
Germany until 1938. This was partly because the Nazi philosophy could not 

1 See p. S0.5G. 


countenance middlemen making a profit on work done by others ; and partly 
because the original German plan of economic mobilization contemplated 
shutting down a large proportion of the small firms, and concentrating arma- 
ment production in the most eflicient plants. Beginning in 1088, however, this 
policy was reversed, and since then the Government has encouraged and pro- 
moted subcontracting. While the bulk of the huge output of tanks, guns, 
planes, etc., has been supplied by large-scale industry, to some extent with the 
aid of labor and equipment taken from small industry, all the indications are 
that there has been a considerable increase in subcontracting during the last 
2 years. Subcontracting is arranged both privately and through government 
agencies, which latter include order exchanges, called bourses. 

Local, State, and regional production organizations are coming into being all 
over this country in answer to needs gradually being recognized. These follow 
in a measure patterns which have been functioning in Great Britain for some 
time. These agencies must be regularized and articulated so as to give to pro- 
curement and production the maximum of assistance. In every seat or potential 
seat of defense industry there should be developed clearing centers such as have 
been set up in England and in certain places in the United States, as in Providence, 
R. I., through which firms having incompletely utilized machine tools or other 
key equipment can currently make this fact known, and other companies having 
work to be done can easily learn where and when capacity is available. 

"faeming-otjt" of antiairceaft gun pabts 

An excellent illustration of how much even of the most complicated defense 
mechanism can be farmed out is afforded by the manufacture of the Oerlikon 
antiaircraft gun as cai'ried on by an organization operating from Providence. 
The Swiss citizen who had had experience in making this gun and desired to .''et 
up its manufacture in this country at first sought to find a suitable factory which 
could be equipped to do the entire fabrication of the gun. He was told, however, 
that owing to the great shortage of machine tools and skilled labor it might be 
months before he would be in a position even to start tooling. At the 
suggestion, therefore, of the Rhode Island Industrial Commission, photostats 
and blueprints were made of the various parts and subassemblies and submitted 
to manufacturers who were thus enabled to make intelligent bids. Without 
going into all the detailed steps taken the final result was that instead of con- 
structing or acquiring a factory, only an engineering and procurement office was 
set up and the actual manufacturing operations were entrusted to some eight 
major subcontractors. 

One of these, a manufacturer of textile-finishing machinery, works exclusively 
on the gunmount. Although itself a subcontractor, this company in turn has 
some 10 to 15 sub-subcontractors, firms which do anything from large casting work 
to the production of small bushings and bearings. Of the sub-subcontractors, one 
operates an iron and brass works, others normally make gears, and others manu- 
facture printing presses and other machinery. Another major subcontractor, 
whose normal business is the making of clothes-pressing machines, works on 
sights, a type of production completely foreign to anything this firm had ever 
done. Yet the Swiss engineer overseeing the operations stated that the production 
of this company, which was extremely rapid, equaled in quality anytliing turned 
out by the original factory in Switzerland. The tool and gage work for this 
subcontractor was sub-subcontracted to a small company which had been organ- 
ized for the purpose of developing and making machinery for the production of 
electrical connectors. Other sub-subcontractors include a great rubber company 
which produces the eye piece, and a watch company, a cotton-gin company and a 
tool company which supply screw-machine parts. 

Another major subcontractor, which has, however, no sub-subcontractors, manu- 
factures subassemblies, which include the hammer plate, the breech block, the 
breech bolt, the ejector, the stop plates, and the stop double loading. Similarly 
another company fabricates miscellaneous parts going into the breach mechanism, 
including the buffer, the side bars, and the trigger mechanism: while another 
manufactures the breech case and the hand grips, and, aided by numerous 
sub-subcontractors, does a large amount of tooling and gage work. 

While many of the firms which have united their efforts to produce this gun 
are located in Rhode Island, much of the work is also done in other States, 
including firms in Connecticut, Massachusetts, New York, New Jersey, 
Pennsylvania, and Maine. 



In all projects for spreading defense work it is highly important to realize, 
however, that subcontracting is a two-way process. There is no use in or- 
ganizing companies and communities to receive orders unless there is a parallel 
progress in making orders available. A serious failure of either end to keep 
pace with the other spells disillusionment. 

As to the betterment of facilities at present in use and beneficial changes 
which could be made in plants about to be pooled, a book could be written. 
There should be set up in the Office of the Under Secretary of War, somewhere 
in the Navy Department, and in the Machine Tool Section of the Office of 
Production Management, management-engineering sections whose business it 
would be to look out over the field and help to raise in a thousand ways the 
efficiency not only of plant organizations but of individual machines as welL 
The recent tendency of the War Department to install management engineers 
in its district offices should be encouraged. 

It is the universal testimony of management engineers that many machines 
now considered as nonusable on defense work can be made to function at an 
expense which is a fractional part of acquiring new ones. There are munitions 
plants that are now satisfactorily turning out work largely on reconditioned 
machines. Normally a machine tool fails because of wear and tear on a few 
parts. It is much quicker as well as cheaper to recondition those parts than 
to build and install a new machine. Those responsible for priority ratings on 
requests for new machine tools must canvass this opi)ortunity for reconditioning 
old tools just as the possibility of increasing capacity through pooling and 
subcontracting should be explored before new plants are authorized. One of 
the most promising functions of these suggested management engineering sec- 
tions would be to assess plant capacities in key industries. Too frequently the 
output of plants is gauged by a too casual estimate of their possibilities. Some- 
times these estimates are such as will least disturb normal business. In this 
way some plants are rated high simply because they deliver what their pro- 
prietors have promised but without realizing their full potentialities. 

When it comes to practical measures for spreading defense work to all indus- 
try, one of the most important keys to production is to be found in "exploding" 
a given product. This is an English term by which is meant so breaking up 
an item of materiel — a tank for instance — into its constituent assemblies and 
parts as to make clear to everyone properly at interest the character of the 
manufacturing involved. We are apt to consider a tank as just a tank and 
an airplane as just an airplane and let it go at that. As long as we think no 
further, this means that only sizable concerns can bid and it is hard to see 
liow and where small concerns can have any part. "Exploding" visualizes the 
'details of the work to be done, and prepares the way both for the separate 
construction of sizable sections of a product, and for the farming out of each 
separable operation where this makes possible the employment of capacity 
which could not otherwise be utilized. Tanks are now being manufactured, 
for example, consisting of some 30,000 parts, over 5,000 being different. A large 
proportion of these parts can, of course, be farmed out. 

If the policy of farming out is to mean much in an emergency as challenging 
as that which now confronts the Nation a considerable reservoir of idle, or 
partially utilized, industrial capacity is presupposed. There are no statistics 
by which one can determine with any exactitude just what percentage of out 
total capacity is now being utilized, but after consulting a good many different 
people in a position to have an opinion I have adopted 40 percent as my best 
guess. Raise or lower this percentage as you like and you still have a stupen- 
dous volume of capacity yet to be put to work. And this capacity is immediately 
available without waiting for either new buildings or new machine tools. 

But putting idle machines to work will not in itself guarantee useful imple- 
ments of war. There must be intelligent planning on the part of the procure- 
ment agencies. Each item of materiel and each of its constituent components 
must be placed on a production schedule showing when its manufacture is to be- 
gin and when it is to be finished. To make such schedules mean anything the 
follow-up must be such as to discover actual or threatened failures at the first 
possible moment. 


To comjilete my testimony I wish to make just two further points. First, it 
is important that we recognize the fact that, under our present set-up, the pro- 
curement agencies of the Army, Navy, and Maritime Commission have the primary 


responsibility for production. Office of Production Management agencies are 
equipped to assist in various ways. Sometimes under Executive orders such 
as tliat providing for tiie recently set up Division of Contract Distribution in 
Office of Production Management, coordinate autliority is provided for. But 
even in these cases, the initiating moves are fully within the province of the 
procurement agencies. 

It is the procurement agencies then which in the first instance establish and are 
responsible for the relationship between the Government and its suppliers. It is 
well to recognize that these relationships are subject to constant change as the 
gravity of our situation gradually becomes recognized. When purchasing on a 
large scale began, our procurement agencies, after signing the contract for a 
given item, were loathe to interfere in any way with the methods of manufac- 
ture — not even to the extent of making suggestions — for fear of relieving the 
supplier of his responsibility under the contract. Generally speaking, the same 
attitude is pretty general today. 

One notes that in England and even in Canada this attitude has been largely 
abandoned. Whenever it appears that production can be increased by a given 
supplier adopting a given course of action there is no hesitation upon the part of 
the procurement agency to outline in considerable detail not only what is to be 
done but even how it is to be done. When the Nation is in peril the niceties of 
ordinary purchasing can be ignored. The public interest must prevail over the 
rules which customarily control relations between buyer and seller. 

I want to emphasize the fact that in a serious situation such as now con-- 
fronts the American people just what constitutes cricket is largely determined by 
one's idea as to how grave the situation is. It has been the common experience- 
both in this country and in England that at the start two or more concerns manu- 
facturing the same item of material frequently refuse to exchange Information 
and even to sit in the same room to discuss common problems. The attitudes 
born of our competitive system seem to carry over 100 percent. Gradually under 
proper leadership such concerns can be led to exchange experiences and jointly 
work for the solution of common difficulties. 

As one conjures up the stress under which we may be operating a few months 
hence the pressure for this type of cooperation between suppliers will be in- 
creased. As a matter of fact in the manufacture of M3 tanks one can detect al- 
ready several successive advances in cooperation. It is my judgment that we will 
not be doing our utmost on this important tank program until the half-dozen 
principal suppliers set up some intercompany organization to unify practices and 
act for the group in many matters such as purchasing and subcontracting where 
common policies will facilitate output. In connection with the $12,000,000 con- 
tract recently awarded the washing machine industry — under which three con- 
cerns are to subcontract to 32 widely separated plants— it will certainly be nec- 
essary to have some central directing organization. There are doubtless other 
lines where organizational cooperation along comparable lines would facilitate 
maximum output. 

Finally, may I suggest that one weakness in our defense organization which has 
been apparent for some months is the failure adequately to utilize the services of 
industrial and production engineers. I know of no agency of the Government- 
military or civil — where men of this type are in demand. 


War today is fought in the workshops of the world — especially in metal-working 
plants — quite as much as on the fighting fronts. Recognizing'this situation, the 
Roster of Scientific and Specialized Personnel, an agency organized by the Na- 
tional Resources Board and the Civil Service Commission and attached to the 
Office of the President, has built up a list of nearly 200 industrial and production 
engineers — about 70 of whom are distinctly grade A and the balance all highly 
recommended. This list was completed early in March. In the following 3 
months just one inquiry as to the names on this list was received by the roster, 
with no record of any appointments. I have not inquired recently, but I think I 
would know it if there had been any material change in the situation. 

The engineers on this list were located and their records secured with the 
assistance of the American Society of Mechanical Engineers, the Association of 
Consulting Management Engineers, the Society for the Advancement of Manage- 
ment, and other highly esteemed agencies. 

In World War No. 1, especially in the Ordnance Department under Generals 
Crozier, Wheeler, and Williams — successive Chiefs of Ordnance — the country 
was scoured for technical skills of this kind. 


The layman is so conversant with differences in training, experience, and tech- 
nical competence as between individuals within the same profession — as for 
instance among doctors — that it should not be necessary to point out that two 
engineers are more apt to have different aptitudes and experience than the same. 
There are literally hundreds of specialties practiced by the group known generally 
as engineers. If we are going to spread defense work geographically and to the 
smaller plants, or even if the larger plants are to be made more effective, it wiU 
be because the several branches of tlie Government directing defense work bring 
into the picture those types of engineers who are intimately acquainted with the 
mechanisms of production control, with machine shops, machine tools, and the 
processes under which materials are fabricated, and who because of their 
specialized knowledge can give unity of spirit and direction to the whole defense 
effort. Every time we order a new machine tool that is not absolutely needed we 
complicate our problem. Every time we learn how to use an idle tool, whether 
through its reconditioning or through organization of pools, it is a clear pick-up. 

Farming out has its problems, and yet in the light of the current situation it is 
after all a relatively simple task. Only standard engineering practices are 
involved. Nothing that is entirely new has to be thought out. Doubtless there 
are some legal restrictions wliich could profitably be modified. But they can 
hardly be advanced as a general bar to the program. Nor are there any doubts 
as to the desirability of farming out. When it comes to theories governing price 
control and priorities there is plenty of opportunity for differences in opinion. 
It is by no means all clear sailing. But when it comes to utilizing idle manu- 
facturing capacity, counteracting priorities and unemployment, and salvaging 
:sniall-businGss enterprises through a policy of farming out the social advantages 
are obvious. 

Our direct goal in all this planning, of course, is to unify and put to use the 
tool power of the Nation. But in achieving this objective by the methods sug- 
gested, we would put our whole back-of-the-line effort on a democratic basis. 
We should so plan the structure of contracting and subcontracting that in the 
smallest shop and in the smallest village — and if the need comes in our homes — 
every lover of liberty can find his station and feel himself or herself a part of a 
noble enterprise — one essential unit of an unconquerable people. 

Exhibit A. — Memorandum on thk Work of the London and Soidtheastebn 

Regional Board 

eepoet by london and southeastern regional board, london, england, 

JULY 24, 1041 

The London and South Eastern Regional Board is one of twelve in the country. 
The Board consists of eight official members and seven nonofficial members. The 
former are the Area Officers of the three Supply Departments — the Admiralty, 
the Ministry of Aircraft Production, and the Ministry of Supply — and repre- 
sentatives of the Board of Trade, Ministry of Labour and National Service and 
Ministry of Transport; the Emergency Repairs Department of the Ministry of 
Works and Buildings, and the Raw Materials Department. The nonofficial mem- 
bers consist of three representatives of employers and three of workpeople, from 
whom the Chairman and Deputy Chairman of the Board are chosen ; if the 
Chairman is a representative of employers, the Deputy Chairman is a represent- 
ative of workpeople, and vice versa. The seventh nonofficial member is the 
Chairman of the Regional Machine Tool Control Committee. 

This combination of oflBcial and nonofl3cial members was designed to provide a 
link between the organs of government and managements and labour who have 
to carry on the actual work of production in the factories. It has been pointed 
out that effective policy must in considerable measure be regional in character. 
Government policy is bound to affect deeply the normal lives of individuals and 
the cherished traditions and rights of managements and Trade Unions. Whilst 
the central authority can lay down the general principles and assist through its 
central machinery in carrying out policy, conditions vary so much in different 
parts of the country that it is essential to make full use of local knowledge and 
adjust policy to local circumstances. 

In practice, the combination of official and nonofficial members has made for 
stimulation of ideas, and there has been a constant flow upwards of constructive 
proposals. On many occasions valuable information as to local conditions has 


been gathered and forwarded to the appropriate authorities. There has resulted 
a greater awareness on the part of Government Departments of the real state of 
affairs obtaining in industry and of criticisms and discontents which exist. 

The Regional Board has been very useful in another respect. The representa- 
tives of the Government Departments concerned wlio have acted as members of 
tlie Board have developed a very real esprit de corps and unity of outlook. They 
have regularly sat round the same table and as a result of these friendly con- 
tacts, effective cooperation betvreen their Departments has increased. Efficient 
coordination of the work of Government Departments is possible only when there 
is close contact at various levels of the administration, and not merely at the 
top. The Area Officers have functioned on a number of informal subcommittees 
which, but for their membership of the same Board, would probably never have 
come into existence. As a result, the Supply Departments have frequently helped 
one another by agreeing to the transfer of labour or manufacturing capacity 
when this was urgently necessary. The need for close cooperation between the 
Supply Departments is all the greater when it is remembered that a large pro- 
portion of the firms in the country are working for more than one Department. 
The Area Officers, who are the local representatives of their Departments, are in 
a position to arrange joint action in the case of individual contractors when this 
is desirable. 

The primary function of the Board is to assist in harnessing industrial ca- 
pacity to the war effort to the maximum possible extent. On the other hand, 
firms already largely engaged in war production periodically have some of their 
machine tools idle, due for example to changes of design, temporary shortages 
of materials, or bottlenecks in the production process. On the other hand, 
many firms have to be switched over from peace to war production. The 
attempt by the Board to utilise spare machine-tool capacity from its Head- 
quarters was not successful. Quite apart from the large number of general 
engineering firms in the Board's Area, there were thousands of nonengineering 
firms whose capacity could in some measure be used for the war effort and who 
in many cases had useful machine tools available, e. g. for maintenance work. 
It was not possible to maintain the contact with these firms which was essential 
if ui=e was to be made of their capacity. 

The Board therefore decided upon a measure of decentralization and "broke 
down" the problems by setting up ten Clearing Centres (as they are called) in 
its Area. Each Centi-e is in charge of an officer with engineering experience, 
under the administrative control of the Board Secretariat. Attached to each 
Centre there is a District Advisory Committee consisting of representatives of 
employers and workpeople. The Conmiittee's function is to mobilise the goodwill 
of local industry, to make its knowledge of local conditions available to the 
Board, and to forward constructive suggestions in relation to the prodtiction 

At the Centres there has been collected detailed information about the firms in 
the district, e. g., machine tool census returns, labour returns, labour inspec- 
tors' reports, information abotit Government Contracts, etc. Intimate contact 
between local firms and the Centre is encouraged as much as possible. The 
activities of the Centres may be conveniently summarized under the following 
heads : 


The aim is to "marry" machine tool spare capacity and overloads. The 
Machine Tool Census, whilst containing a wealth of valuable information, con- 
stitutes a static record of machine tool capacity, whereas spare capacity is 
a constantly changing factor. Firms are therefore encouraged to contact their 
Clearing Centre whenever they have spare capacity or are experiencing over- 
loads. The Centre works on analogous lines to an Employment Exchange, 
which links up workmen seeking employment and employers requiring labour. 
A considerable volume of contracts has been placed through the Centres, thus 
utilising spare capacity which probably would have remained idle otherwise. 
Two points of interest may be noted. The monetary value of a contract placed 
through a Centre is not an accurate index of its usefulness, as a serious 
bottleneck in production may be relieved by finding a few spare hours on an 
urgently needed machine. It has also been found by experience that large 
and powerful firms whose order books are full to overflowing frequently have 
substantial short-term machine tool capacity available, for reasons mentioned 
above, which can be utilised through the Centres. 



— fl^MOitn - 


Sug • CowwiTTEt III 










»tc( , n memten of the lummi 
toNSiiTwa Of wee Emfio«((5 




To achieve a "total-war" effort it is essential to mobilise the maximum number 
of firms for war production. Very many fii'ms whose peacetime production is 
disappearing are anxious to be so mobilised. In an effort to get war work 
they "badger" innumerable Government Departments, involving a considerable 
expenditure of administrative time, often with little result. The firms need 
guidance on how to switch over to war production and how to adapt their 
plant. This guidance cannot be given effectively by an overworked central 
administrative machine. Personal contact with a firm and an intimate knowl 
edge of its personnel and equipment are necessary if quick and effective advice 
is to be given. It should be stressed that many nonengineering firms have 
useful machine tools, and that many firms with no such machines can make 
their contribution to the war effort. 

The Centres set up by the Board have only been functioning for some eight 
months, i. e., they came on the scene at a fairly late stage in the rearmament 
programme, but they have been able to help many firms, especially the smaller 
firms who are not fully equipped to deal with the whole job by finding them 
capacity to suit their requirements. 

(3) cle:aring centres as information bureaux 

One of the important functions of the Clearing Centres has been to serve 
as Information Bureaux. Government Departments receive inniunerable en- 
quiries which should properly be addressed elsewhere. Firms in difficulties, 
whether it be in connection with obtaining contracts, labour, or materials, 
seek to solve their problems by making application through an extraordinary 
diversity of channels. Quite recently, for example, there was forwarded to 
the Board from the Prime Minister's office, from the Ministry of Labour and 
the Ministry of Supply, correspondence with one firm relating to the same 
matter. Firms do not know which section of Government Machinery deals 
with their particular problem. The Clearing Centres liave directed very many 
firms to the right Directorate or Control, with great saving of time and con- 
venience to all concerned. 


Government Departments are beginning to appreciate the value of the 
Clearing Centre organization in increasing measure. The Ministry of Labour 
and National Service has already attached an Officer to each Clearing Centre, 
who is able to make use of the intimate knowledge of local conditions pos- 
sessed by the District Advisory Committees and the Officers in charge of 
the Centres. This is a most interesting development. The Board itself is a 
regional organisation and it has further decentralised by setting up the Cen- 
tres. Similarly the Ministry of Labour is "breaking up" its problems more 
and more, and at the end of the chain of decentralisation we find the Officers 
of the Board and the Ministry of Labour working intimately together at the 
Centres, so mucli so, that they use the same set of files. 

The information collected at the Centres is of great value. Numerous 
Production Directorates of the Supply Departments each have their officers 
in tlie field searching for capacity. Some overlapping must result, and in- 
dividual firms may be visited by a series of officers each seeking capacity 
suitable for his particular Directorate, but not very interested in other capacity 
which the firm may have. To an increasing extent the various Production 
and Progress Officers of the Supply Departments are contacting the Centres 
where detailed and up-to-date information about firms' spare capacity, backed 
by personal knowledge of the firm, is readily available. 

In short, the Centres constitute valuable decentralised administrative ma- 
chinery, serving as a link between Government and industry, commanding 
through the District Advisory Committees attached to them, the good will of 
employers and workpeople alike. 

The Regional Board has been active in other fields. It has helped to intro- 
duce the "spotter system" in the London area, whereby neighbouring firms 
group themselves under local controls, so that the "alarm within the alert" 
signal can be given when there is imminent danger of enemy air attack. 



The Board deals with any problem which it considers may affect production. 
For example, the transport of the workers. Transport is an essential adjunct 
to iiidustry and they must be brought into step with each other if due con- 
sideration is to be given to the welfare of the workpeople. With the move- 
ment of many hundreds of thousands of workers to the districts where factories 
are located, new problems of transportation arose, and had to be considered 
more closely. It was felt that the unnecessary delays which the workers were 
experiencing in getting from their homes to the factories and vice versa were 
tiring them and resulting in a loss of energy with its consequent effect upon 
production. The Board invited the London Transport authorities to discuss 
this problem with them, with the result that all the necessary steps were taken 
to meet this very serious transport problem. The difRculties experienced in 
meeting emergency conditions have been overcome, with the good will and 
determination of all interested parties, with the view of making the National 
effort as effective as possible. 

To meet changing conditions, the Board has organised the principal London 
firms in 32 Local Transport Groups, which will serve as a link between industry 
and the transport undertakings. The Groups will give advance information on 
changes of shift hours so that adequate transport services can be planned, and 
will endeavour to arrange the staggering of shift hours so as to minimise traffic 
loads at peak periods. 

The broad result of the above analysis appears to be this. At a time when 
the national life and industrial activity are increasingly coming under Gov- 
ernment control or direction, a very large expansion of administrative ma- 
chinery is inevitable. For rapid and effective action a high degree of 
decentralization is essential. Further, when industry is engaged in the ex- 
tremely complex and difficult process of switching over from peace to war pro- 
duction, when masses of regulations and new controls, limitations, and 
restrictions of normal industrial activity are constantly being imposed, firms 
need information and guidance. It is desirable that they should be able to 
apply for this to a local office, where a "living" personal contact can be made 
with oflScers, with intimate knowledge of local conditions, rather than they 
should adopt the inevitably slower process of written communication with the 
headquarters of some remote Government department. This living contact 
is of very great importance ; it makes for mutual understanding between Gov- 
ernment and industry and enables knowledge of administrative policy to be 
spread quickly and smoothly. It can often overcome the attitude of hostility 
toward bureaucracy which some industrialists ai'e inclined to adopt. 

The Clearing Centres set up by the Board are doing a very useful job of 
work, and their extension to the whole of the United Kingdom has now been 
approved by the Production Executive of the War Cabinet. 

Exhibit C— Form Used by English Clearing Centers To Obtain Data on Spake 

Machine Tool Capacity 


To Clearing Centesi: 

,_ C. C. Serial No. 

' Date received in C. C. 

Firm's Serial No. (if any) 

Spare Machine Tool Capacity 

Name of Firm Phone No. 

Address ^ Firm's Executive 

Machine description 
and work dimensions 

^ Give the name of the executive able to handle this matter. 


Spare Machine Tool Capacity — Continued 

Subsidiary equipment 

available for above Machine Code No. 

Grade of work possible 
with above: 

" 1. Max. machined dimension plus or minus .0015", 

'2. Max. machined dimension plus or minus .005". 

'3. Max. machined dimension plus or minus Vca"- 

*4. Wider limits — give details 

Material workable : 

■ 1. Nonferrous. 

' 2. Light Alloy. 

' 3. High Tensile Steels. 
We could provide 
tooling : 

*1. Cams and Jigs. 

' 2. Press Tools. 

*3. Gauges. 

•4. Cutters. 

*5. Other Items: 

Spare machine hours available per week 

No. of weeks available 

Remarks : 

(Date) - 

'Delete items which do not apply. 

(The following letter and article were received subsequent to the 
hearing and, in accordance with instructions from the chairman, were 
included in the record.) 

NOVEMBEE 5, 1941. 
Hon. John H. Tolan, 

Chairman, House Committee Investigating Defense Migration, 

Washington, D. C. 
Mt Dear Mr. Tolan : Herewith I send you a report on farming out of war con- 
tracts in Germany and some other relative information, all as drafted by the 
research staff of the New School for Social Research, 06 West Twelfth Street, New 
York, N. Y., Alvin Johnson, director. Dr. Johnson advises us that the inquiry was 
conducted under Dr. Herbert Block, the school's chief research worker in this field. 
I have found this report very enlisihtening, and I am sure you will be interested 
in it. There is no harm in its being listed in any publication designed to enlighten 
our defense workers. 

Yours very sincerely, 

MoRKis L. Cooke. 

Exhibit D. — "Farming Oui" of Defense Work : Gkrman Methods and 


prepaeicd by dr. herbert block for the new school, eor social research, 
dr. alvin johnson, director 

i. general sukvey 

The first eonomic group to get subcontracts in National Socialist Germany were 
the craftsmen. Tlie public authorities, who were fully occupied with the huge 
rearmament program, were unable to negotiate individually with the many thou- 


sands of workshop owners. It was therefore necessary to form organizations 
which could accept the governmental order, distribute it among the craftsmen, 
and control its execution. 

Such organizations, called cooperative associations (Lieferungsgenossen- 
schaften), had sprung up like mushrooms in the first World War, but with the 
restoration of peace all but a few were dissolved. When, however, at the end of 
1932 — prior to the creation of the Third Reich — a new tide of governmental con- 
tracts was approaching, cooperative associations of tailors and shoemakers at 
once emerged. Thus the Nazis had merely to be guided by precedence. They 
founded some 200 associations of mechanics, joiners, saddlers, and other trades 
in order to utilize their productive capacity for rearmament. A strict regulation 
of the association prevented such waste of effort as prevailed in the war of 1914-18. 

The available material, cautiously evaluated, leads to the conclusion that these 
associations stood the test. The craftsmen, still under the influences of the great 
depression, were eager to participate in public contracts, and did not mind 
neglecting their private customers. 

It was about 2 years after the Nazis came into power, that another type of 
organization came into existence, the cooperative group (Arbeitsgemeinschaft). 
The associations of the craftsmen formed groups of masons, carpenters, plumbers, 
etc., and put them to work in the huge building operations of the Third Reich. 
The owners with their employees and machines have been often transferred to 
remote places, while the members of the cooperative associations are working in 
the workshops. Although the latter are permanent organizations, the cooperative 
groups are founded only for the duration of a specific construction contract. 

In addition, single workshops or groups of them have been placed with labor 
and machinery into large factories. Fewer persons may have been involved in 
this interesting type of organization than in the others, but the transformation 
of artisans into industrial workers is significant for the fate of craftsmanship 
in Nazi Germany. Hundreds of thousands of workshops have been closed 
down in recent years, and the craftsmen and their employees have beeen absorbed 
into the factories. 

In the industrial field there is, as a rule, no need for new organizations to act 
as special centers for subcontracting, for each comparatively large enterprise is 
able to fulfill this task. Above all, subcontracting itself proved unnecessary so 
long as industrial capacity was not fully utilized or unemployed labor not fully 
absorbed. Therefore, up to 19.38 the Government itself decided by the issue of 
its contracts who should benefit from its orders, and did not allow a concern to 
pass part of its governmental contract to other firms beyond the customary 
division of labor. 

At the beginning of 1938 the situation took a different turn. Industry was 
fully employed and the businessmen no longer endeavored to obtain orders. The 
governmental departments had increasing difficulties in placing their orders and 
in getting the material in time. Since then they have encouraged and promoted 

It is not easy to assess the results of the German exi)erience in subcontracting. 
Certain general difficulties are obvious. The subcontracting firms are, as a rule, 
small and less efficient in technique and organization. Defects of the product and 
delays in delivery are bound to cause friction. Subcontracting raises the level 
of prime costs, and can be justified economically only because it saves the 
supplementary costs which would be involved in any expansion of industrial 
capacity. No statistical data have been published which would allow us to 
estimate the actual range of subcontracting. That it must have increased 
considerably during the last 2 years, especially in the metal industries, is indi- 
cated by the Government's having found it necessary to regulate by a special 
decree price fixing in subcontracting. The fact that small firms in the war- 
supplies industries seem to be fully employed also points in this direction. 

It is interesting to note that the method of subcontracting is not in accord with 
the original German plan of economic mobilization, which intended to shut down 
a large part of the small firms and to concentrate armament production in the 
most efficient plants. The peculiar course of the present war — short of blitzkrieg 
followed by long months of relative military inactivity and the growing dangers 
of air attacks — favored the spreading out of orders. But, at the same time, the 
importance of this decentralization of production must not be overestimated. 
The huge output of tanks, guns, planes, etc., has been supplied by large-scale 
industry, which is constantly being expanded by the transfer of men and equip- 
ment from small firms. The tendency toward industrial concentration seems to 
be growing, especially in the consumer-goods industries. 


The success of subcontracting is largely due to far-reaching standardization 
of the products and to an extensive training activity. The number of varied 
types of military equipment, as well as machinery and consumer goods has been 
drastically reduced. Thousands of instructors are at vpork all over the country 
training whole armies of workers, craftsmen, and even farmers in the production 
of war materials and in the use of substitutes. 

The sources on which this report is based are referred to in appendix I. 
Nowhere has the whole problem been treated systematically. The political and 
economic press confines itself to discussing the question of formal organiza- 
tion. Information concerning the actual working of the subcontracting busi- 
ness had to be gathered from scattered references, primarily from technical 
periodicals. The material covers the period up to the spring of 1941. 


A. How to find suitable suhcontractors. — Although defense orders were fai'med 
out to craftsmen before large-scale industry took to subcontracting, the part 
which industry plays today in the war efforts is much more significant. As 
there is no compulsory subcontracting, a number of manufacturers have been 
reluctant to practice it, mainly because of their responsibility for the deliveries 
and because of the difficulties resulting from subcontracting. The press there- 
fore has constantly stressed the importance of farming out and has exhorted 
the entrepreneurs to adopt this method. 

Concerns which are willing to deal with smaller factories have two ways 
of accomplishing their purpose, a private way and an official one. The private 
way is : 

1. Private contracts through inquiries of firms which are known or recom- 
mended, or which have answered or placed an advertisement. It goes with- 
out saying that middlemen play a big part in making contacts between prime 
contractors and potential subcontractors. These middlemen have obviously 
charged exorbitant commissions. Friedrich Landfried, Secretary of State in 
the Reich Ministry of Economic Affairs, spoke at the end of 1939 of "a para- 
sitic crowd of middlemen putting commissions in their pockets without having 
done any respon.sible work." On September 11, 1940, a decree was issued 
which — repeating former ordinances — aimed at the elimination of all middle- 
men whose activities were not justified from the point of view of the whole 
economy, and which prohibited commissions unwarranted from the same point 
of view. The press admitted "numerous unpleasant occurrences" but admitted 
that the criterion "not justified from the point of view of the whole economy" 
was rather vague. 

2. Official agencies : Official intermediaries between prime contractors and 
subcontractors are the disti'ict bureaus for the equal distribution of govern- 
mental contract (Bezirksausgleichsstellen fiir offentliche Auftriige). They are 
the regional organizations of the Reich board for the equal distribution of 
governmental contracts which is a division of the Reich Ministry of Economic 
Affairs. The army, the navy, the air force and the party never place a single 
order without consulting or without at least informing the district bureaus 
which keep a complete card register of all firms fit for governmental contracts. 
These cards contain judgments of the party and the labor front on the political 
reliability, the financial standing, and the taxes of the entrepreneur ; and 
data on the personnel, the productive capacity, the exports, and the fluctuations 
of output of the entrepreneur's plant. 

Equipiied with such vast information, the district bureaus intervened in 
behalf of the farming-out business, but their efforts seem not to be very suc- 
cessful ; the biilk of subcontracting evidently is arranged privately. As the 
liureaus have a survey only of their district and as they wanted to facilitate 
the interregional distribution of orders, they created, conjointly with other 
authorities — so-called order exchanges (Auftragsborsen) in western, south- 
ern, and eastern Germany. The order exchange for eastern Germany (Ost- 
deutsche Auftragsburse), Berlin, may serve as an example of how these insti- 
tutions are working. 

3. Berlin order exchange : The order exchange which was opened in September 
1940, in the building of the Berlin stock exchange, had the task of finding out 
subcontractors for the metal industries in the Berlin area. All the factories of 
the capital and its surroundings have been fully occupied ; the district bureau 
(Bozirksausgleichsstelle) therefore was unable to overcome the bottlenecks. 
While the prime contractors admitted to the exchange have been Berlin manu- 


facturers of arms and similar war supplies, tbe subcontractors have been firms 
of the metal-products industry in the east of the Reich. 

The exchange covers a far-flung territory. German experiences taught that 
the distance between the prime and the subcontractor should not exceed 250 
kilometers, or 155 miles. A greater distance causes a waste of time and money 
for the frequent visits which the prime contractor inevitably has to pay his 
subcontractors ; it causes expensive freight charges ; and from the point of view 
of the Government, it puts an unnecessary strain on the railroads, which are 
already overburdened. The order exchange for eastern Germany includes con- 
cerns located in Silesia, the Sudeten area, the so-called protectorate, the Provinces 
of Poznan (Poland), of Danzig-West Prussia, and of East Prussia. The distance 
from Berlin to Prague, to Breslau, or to Poznan is about 155 miles, but other 
parts of eastern Germany, e. g., Dtuizig or East Prussia, are outside the 155-mile 

The eastern firms admitted to the exchange were carefully selected. The 
competent district bureaus examined their political reliability, their commercial 
standards, and their technical efliciency with the utmost attention. The bureaus 
were informed about the needs of the Berlin prime contractors and chose only 
concerns which apparently were able to satisfy these wants. For instance, of 
170 Silesian firms interested in getting subcontracts only 60 were admitted. 

Nevertheless, there was, at least at the beginning of the exchange business, a 
discrepancy between the needs of the prime contractors and the facilities of 
the smaller firms. The Berlin manufacturers wanted to farm out what is called 
in German "Arbeiten der spanabhebenden Verformung," e. g., the work of trans- 
forming with machine cutting, such as turning, milling, drilling, planing, grind- 
ing, and cutting threads — operations which, moreover, must be executed with 
the utmost exactitude. Most of the factories in eastern Germany were not 
equipped for such operations; they were looking for sheet-metal work. 

B. The contract and its execution. — If the small manufacturer apparently is 
able to satisfy the needs of the prime contractor, who usually first inspects "the 
plant of the subcontractor, both manufacturers sign an agreement containing 
the following items : 

1. Technical content: At the end of the last section we pointed out the kind 
of work which is farmed out by the Berlin arms manufacturers. In addition, 
appendix II contains a drawing of work pieces of the types usually farmed out. 

The contract has to fix the exact dimensions of the work pieces and the 
tolerances. Parts which are not properly finished have to be overhauled. I'su- 
ally they are returned, but sometimes it is preferable to give them the last 
finish in the prime contractor's plant in order to same time (the freight is 
charged to the subcontractor). A clause must be added to the contract concern- 
ing the procedure in such cases and the distribution of any additional expenses. 
When half-finished pieces are processed, part of them inevitably are impaired; 
the contract therefore must also deal with this problem. 

It is often advantageous for the prime contractor to render the subcontractor 
some technical assistance. The small factory often lacks the appliances necessary 
for the production of the subcontracted parts, in which case the prime contractor 
usually furnishes such implements, or at least drawings of them, through his own 
machine-tools department. Moreover, he delegates instructors and foremen to 
acquaint the staff of the subcontractor with its task. If the small factory 
delivers defective pieces, work is facilitated when the prime contractor sends 
specialists to investigate the causes. Frequently obstacles are easily overcome 
by overhauling or by precise adjustments of the machines, by improved cooling 
or by supplying more eflScient tools. It is expedient, however, to stipulate ac- 
curately the conditions of such assistance. Otherwise misunderstandings as to 
who shall bear the expenses will probably arise, assistance will be taken for 
granted, and the result will be a lawsuit. 

The German experts of scientific management maintain that both parties have 
to establish some organization to handle the subcontracting business. The small 
factory needs an organization, however small, which rationalizes the working 
plans, the fixing of the piece wages, and the inspection of the finished goods 
prior to their delivery. It is profitable for the prime contractor to deal with the 
subcontractors as though they were units of his own corporation. 

For further details of technique and organization, refer to appendix III. 

2. Delivery : The timing of the deliveries is somewhat troublesome. The pri- 
mary contractors are constantly pressed for a speedy delivery. The govern- 
mental departments are disposed to fix the terms too short ; they designate as 
"urgent in the interest of the state" (staatspolitisch wichtig) orders which are 


not pressing, and they constantly request delivery, for tbey know that he who 
does not insist will never get his material in time. Goering, in charge of the 
four years' plan, was compelled actually to prohibit attempts of the authorities 
to intimidate the manufacturers for the purpose of rapid delivery. It is most 
important for the prime contractor that the subcontractor deliver in time. That 
is a frequent obstacle, for the small manufacturer often has to overcome diflBcul- 
ties, at least in the beginning, which cause delay, or he may just be a man who 
has not learned punctuality. 

3. Price : The cost price of subcontracted pieces offers the same problems in 
Germany as in other countries. There occur cases in which the plant of the 
prime contractor is less elEcient than the plant of the subcontractor. If this is 
so, the prime contractor does not hesitate a moment to buy the necessary parts 
from the subcontractor. But we should not speak of subcontracting in a case 
of normal business relations between a prime contractor and a specialized 
supplier. Subcontracting in the technical sense is done only when the prime 
contractor cannot wait until he himself has built an additional plant or when it 
would be a waste of capital to enlarge the productive capacity for the short 
duration of a war boom. Thus we may say that — leaving aside the problem of 
depreciation — the original expenses of the subcontractor generally are higher 
than those of the prime contractor. Subcontracted parts are more expensive 
than the articles of the prime contractor's own factory. 

The German Government is well aware of this fact. If the difference of 
the cost price alone would haA'e increased the price of articles containing pub- 
ccmtracted parts no special regulation of the prices in the subcontracting 
business would have been published. The general rules would have been {suffi- 
cient. However, subcontracting became a field of war profiteering. Interestingly 
enough, not so much for the subcontractors as for the prime contractors. It 
may be that some subcontractors made excessive profits, but our Impression is 
that the prime contractors have been the sinners. Official investigations dis- 
closed that the prime contractors "frequently charged intolerably high com- 
missions" which increased the price of the finished goods and which sometimes 
may have reduced the profit of the subcontractor. There are indications that, 
on the whole, subcontracts yield lower rates than prime contracts. The small 
businessmen therefore are eager to get prime contracts rather than subcontracts. 

The Government did not intervene before the subcontracting business had 
grown to a considerable extent. On September 11, 1940, the Reich, in order 
to lower excessive profits, published the decree, mentioned in section A, regulat- 
ing commissions and the activity of middlemen. Another decree issued half a 
year later, in March 1941, covered a wider field ; it regulated not only the com- 
missions but the prices in the subcontracting business by prescribing in which 
cases the so-called LSO have to be applied. 

LSO is an abbreviation of "Leitsatze fur die Preisermittlung auf Grund der 
Selbstkosten bei Leistungen fur offentliche Auftraggeber," e. g., directions for 
the determination of prices on the basis of cost prices for suppliers to the 
Government. They were drawn up by the German price administrator in fall 
1938 when it became evident that the price ceiling and other general price 
regulations were unable to prevent war profiteering on a large scale. The 
Government wanted to get the war materials as cheaply as possible for financial 
as well as for monetary and for social reasons. As the public authorities had 
to buy in a seller's market — their demands exceeded by far the supply — they 
resolved to replace the laws of the market by a rather sophisticated system of 
cost accounting. The prices had to be based on the production cost (including 
a suitable profit), not on the costs of individual plants in which system no 
businessman would have an interest in lowering the cost, but on "normal" cost 
leaving differential profits to the efficient concerns. 

The decree of March 11, 1941. applied the LSO to subcontracts in a very 
discreet manner. The German Government, which never had any particular 
regard for private interests, was most careful — as a commentator put it — "not 
to disturb the purely private business relations between prime contractors 
and subcontractors" (Der deutsche Volkswirt, April 4, 1941, p. 1006). The 
LSO are applicable neither to subcontracts of little importance nor to market- 
able goods unless the market price is obviously exceeded. If the object of the 
subcontract is not a marketable good (e. g., if the subcontractor processes a 
semifinished article) and if the cost is considerable, the public authorities inform 
the prime contractor as to the prices of which "bits and pieces" — to use the 
English figure of speech — shall be computed according to the LSO. The prime 


contractor passes these instructions on to the subcontractor, who thereafter 
has to expect an examination of his books by an official auditor, and a heavy 
fine in case he has not adhered to the directions of the price administrator. 

However, if the contract is ratlier complex or if it has to be passed out 
in a hurry, the authorities may not be able to determine which pieces are 
subject to the LSO. In such a case they may invest the prime contractor 
with a so-called LSO authority (LSO Vollmacht) and now it is up to him to 
bind the subcontractors to the LSO. The authorization burdens the prime 
contractor with a great responsibility and therefore it is given only to very 
reliable firms. In any case the prime as well as the subcontractors have to 
act according to the "maxims of an economy in war" (nach den Grundsiitzen 
der Kriegsverpflichteten Wiretchaft) which interdict highly profitable prices. 


A. Craftsmen. — The decline of handicraft : Under the regime of Hitler who 
promised "a complete reconstruction" and "a new heyday of German handi- 
craft," the number of workshops has been reduced considerably. As we men- 
tioned before, hundreds of thousands of craftsmen have been induced or even 
compelled to become workmen. The press of the handicraft organizations has 
had to demonstrate to its readers "how more happily the workman lives than 
the so-called independent businessman." The number of establishments dwindled 
in 1936-37 (the year beginning April 1 and ending March 31) bv 47,000; in 
1937-38 by 57,000; in 1938-39 by 78,000. In the short period of 3 years 11 to 
12 percent of all workshops vanished. 

The war has accelerated this development because numerous craftsmen and 
journeymen have been drafted, and a multitude of workshops have had to 
close down for want of labor. In Thuringia, for instance, so many shoe- 
makers were selected for military service that a great number of communities 
were left without a single cobbler. The Department of Commerce of Thuringia 
therefore induced a big shoe factory in Erfurt to establish a repairing service 
for 55,000 to 60,000 customers (for the present time of emergency, says the 
Ministry). The shoes are collected and returned by truck. 

On the other hand, however, a large amount of defense work has been farmed 
out to craftsmen, for Germany wanted to utilize all her reserves of labor and 
machinery ; the workshops, scattered over the whole country, are less en- 
dangered by air raids than the factories and, finally, the craftsmen "are less 
susceptible to enemy propaganda" than workmen. 

2. The organization of farming out : A restricted number of relatively large 
workshops are efficient enough to participate individually in public tender and 
to accept large orders. For instance, there are craftsmen who are building 
finished speedboats in their boat yards. But the number of these large work- 
shops amounted only to 3.4 percent of all workshops, according to a statement 
made in 1938. Consequently organizations had to be established as inter- 
mediaries between the authorities and the craftsmen. 

These organizations have to fulfill numerous tasks : They have to choose those 
w^orkshops which 'are prepared to cooperate in public contracts ; they have to 
negotiate with them, to assist, to train, and to control them; they have to 
procure raw materials for them. i. e., they have to get the necessary permits, 
a business which the craftsmen individually never would bring to a conclusion. 
Last but not least, they have to take care of the financing. Several types of 
organization have been develoi)ed for these purposes. 

3. Permanent cooperative associations (Landeslieferungsgenossenschaften) : 
The present system of contract cooperatives has much in common with the set- 
up of those cooperatives established during the war of 1914-18. In both cases 
the cooperative societies were founded under the auspices of the handicraft as- 
sociations and had their head office in a Reich center for handicraft contracts. 
But in the First World War the number of cooperatives was allowed to rise 
from 1,100 to 1,200, while today only one "Landeslieferungsgenossenschaft" (ab- 
breviated Lageno) is admitted in each economic district and for each line of 
craftsmanship. At the end of 1940 there existed some 200 such associations. 
A dozen or more are established by the tailors, the shoemakers, the joiners, the 
saddlers and upholsterers, the cartwrights, the blacksmiths, the mechanics, the 
basket makers, the brush makers, the cap makers and furriers, the weavers, 


and the knitters. There is a dozen cooperatives of ropers, net and sail makers 
working for the navy. The cooperatives of dyers and cleaners, for instance, 
dyed Czech and Polish uniforms which were confiscated in the occupied areas. 
Cooperative societies of goldsmiths have orders for the manufacture of Iron 
Crosses. According to a German author (U. IMiiller, pp. 62-64, see appendix I) 
it was the aim of the Nazi government from its beginning to develop the con- 
tract cooperatives as instruments of war supply production. "As the contract 
cooperatives are working almost exclusively for the army," details on their 
activities are not available "on principle." 

Members of the Lageno are the compulsory associations of the workshops, 
local cooperative societies, and individual craftsmen. As it may happen that 
large and urgent orders are pouring in at a time when the member workshops 
are already fully occupied, the Lugeuo signs agreements with outsiders who 
pledge assistance in such an emergency ; these outsiders are called reserve troops 
( Berei tschaf tstrupp ) . 

The Lageno is entitled to negotiate on war contracts with the regional authori- 
ties; at the same time it has to execute the orders which are handed over by 
the Reich center. The allotment of the orders among the members is frequently 
done by confidential men of the guilds who at the same time distribute the raw 
materials and collect the finished goods. Each member gets a share in the 
order according to his productive capacity, his degree of employment, or his 
reliability ; sometimes contracts are rotated among the members. 

The members are usually usable to finance the business. The shares of the 
cooperative associations have a face value varying between RM (Reichsmark) 
20 and 500. The guilds, which are not wealthy, are entitled by the German 
Department of Commerce to invest half of their estate in Lageno shares, but they 
are not allowed to acquire more than a seventieth of the capital of a single 
cooperative. Thus the capital is small and the same is true of the reserves. 
But the Central Bank of the German Cooperative Societies (Deutsche Zentral- 
genossenschaftskasse) and its banking system are ready to make advances 
against assignment of the claims. The public authorities allow such assignments 
as a .special concession of the cooperatives of the craftsmen. 

After overcoming many difficulties, the Lageno evidently fulfill the expectations 
of the Government. They have been useful in the execution of big orders which 
can be split up into many equal parts and which are easily supervised in produc- 
tion. It goes without saying that the craftsmen who participate in such orders 
have to be disciplined and for this purpose the Reich center has organized training 

The leaders of German handicraft have expressed their willingness to carry 
on these cooperatives beyond the present emergency and hope to oust the middle- 
men from certain markets, e. g., from the clothing bvisiness. These expectations 
are the more questionable as the craftsmen have been spoiled by the relatively 
easy public contracts. Throughout Germany complaints are heard about the 
negligence with which the craftsmen are treating their private customers. Many 
of them prefer going completely without private orders ; others accept orders but 
do not carry them out or charge exorbitant prices (it is very difficult to apply the 
price ceiling to the individual work of craftsmen). 

4. Cooperative groups for specific purposes (Arbeitsgemeinschaften) : In the 
course of Germany's rearmament huge building operations became necessary : 
Military roads — the famous Autobahnen — big plants in regions which are less 
exposed to invasion and air raids, mostly in agricultural regions ; houses for those 
workmen transferred to new industrial centers ; caserns ; and fortifications, espe- 
cially the Siegfried Line at the French frontier. Artisans are predominant in the 
construction business and when those large plans were projected with the inten- 
tion of carrying them out swift as lightning, it was impossible to rely upon only 
the industrial firms or the big craftsmen. It was necessary to utilize the produc- 
tive capacity of the little fellows too. 

These small craft.smen became organized, through the intermediation of the 
guilds, into a rather loose form called Arbeitsgenieinschaft. Such a cooperative 
group is an organization of craftsmen of different trades (for instance, masons, 
carpenters, painters, plumbers, etc.) for the purpose of carrying out a single 
proj;'ct of large extent. The construction of the Siegfried Line offers a good 
example. Almost 300 Arbeitsgemeinschaften, with 1,300 persons and plenty of 
machines (e. g., 1,600 cement mixers) and tools were employed in the main lines 


of the construction business (Bauhauptliandwerk), leaving aside 300 middle-sized 
businesses with prime contracts. We learn from these data that the average 
Arbeitsgemeinschaft was rather small (at least in this case). Hundreds of 
Arbeits^emeinschaf ten were busy in the accesory lines of the construction industry 
(Baunebenhandwerk). Moreover, there were groups of bakers, butchers, and 
other craftsmen whose task it was to supply the workers with bread and meat. 
The maintenance and repairing of the building machines was done by an organi- 
zation of automobile mechanics (Kraftfahrzeughandwerk) which is said to have 
worked excellently. 

5. Cooperative building societies (Bautriiger-Gesellschaften) are owned by the 
organized handicraft, and do construction business for their own account. There 
are 17 companies of this type. The "Bautriiger A. G., gemeinniitzige Wohnungs- 
baugesellschaft des Handwerks der Ostmark in Vienna," forms a good example. 
The shareholders of this joint-stock company are the Deutsche Handwerks und 
Gewerbetag in Berlin (a head organization of the Chambers of Handicraft), the 
Chamber of Handicraft in Vienna, and the Zentralkasse slidostdeutscher Genos- 
senschaften also in Vienna (the central bank of the cooperative societies in 
southeastern Germany). The share capital amounted to RM1,500,000, according 
to the last available data. In 1939 the corporation completed 108 "Volkswoh- 
nungen" (apartments for working people) ; 313 were in the course of construction, 
half of it by order of the air force. Its assets consisted mainly of uncompleted 
houses (RM1,640,000 at the end of 1939), the biggest item among the liabilities 
being credits of governmental banks which do the greater part of the financing 
of the Bautriiger-Gesellschaften. 

Similar enterprises are the housing societies ( Hausbau-Gesellschaf ten ) . But, 
in contrast to the "Bautrager-Gesellschaften," they are working for someone else's 
account. They act either as a trustee of the builder or as the administrative 
center of the numerous craftsmen who participate in a large building project. 
There are six of these companies located respectively in Berlin, Vienna, Munich, 
Brunswick, Weimar, and Trier. For instance, the Hausbau A. G. des Handwerks 
der Ostmark, Arbeitseinsatzgesellschaft des Reichsstandes des Deutschen Hand- 
werks in Vienna, is owned by the same shareholders as the above-mentioned enter- 
prise. In 1939 this company constructed in different parts of Austria 695 apart- 
ments for the army and 108 apartments for other builders' accounts, besides its 
participation in the construction of an electric substation in Carinthia. Rather 
important is the company in Brunswick ( Hausbau-Gesellschaf t des Niedersach- 
sischen Handwerks) which organized the housing activities in the Salzgitter area 
where the Herman Goering-Werke are located _ It is considered as one of its 
merits that it succeeded in transferring craftsmen with all their personnel and 
tools from regions lacking governmental contracts to the Salzgitter area where 
they worked in lax'ge groups (Arbeitsgemeinschaften). A corporation for the 
special purpose of building barracks is the Unterkunftslager-Gesellschaft des 
Handwerks m. b. H. 

In some cases entire workshops or groups of workshops have been inserted into 
large factories. That means that the bosses of the workshops (e. g., mechanics 
or blacksmiths) with their journeymen, their apprentices, and their tools are 
absorbed by big concerns in which they are working not as artisans but as simple 
workmen. However, the crew of each workshop is paid as a unit and will be 
dismissed as a unit at some future day. 

B. Farmers. — In conclusion, a few words on the participation of the peasant 
population in the defense work. With the help of small motors and machine tools 
they are manufacturing in the dull season simple and standardized parts of 
military equipment. Machine tools for this purpose were sent to the farmers as 
early as 1937 and several months later instructors came to train the farm people. 
It is worth while mentioning that in .Tune 1939 a decree compelled the power 
stations to raise annually RM3.5,000.000 for a period of 5 years; this fund is 
destined to reduce the price of electric motors and machines bought by the 
farmers. The electrification of the countryside has the double purpose of intensi- 
fying agricultural production and of facilitating the farming out of defense work. 


Appendix I. Litebatuke on the Spreading of Governmental Obders in Germany 

Miiller, Ulrich. Die Enttvicklung des Handwerks in den Letzten Jahren unter 

hesonderer Beriicksichtigung dcr national-sozialistischen Handwekspolitik und 

Hand irerksgesetzgcbuvg. (Berlin, 1938.) 
Nicklisch, H., edited by, Handle or terhnch der Betriehswirtschaft, 2nd edit. (Stutt- 
gart 1937-39), see articles: "Handwerk," "Kammern," "Lieferungsgemein- 

schaften," "Verdingung." 
Hess, Otto and Zeidler, F., edited by and commented on, Die Preisbildung bel 

offeutlichen Auftriigen. Kommentar der RPO und LSO und weiterer Erlasse 

Loose-leaf edition, 2nd edit. (Hamburg, 1940). 
Maschinenbau. Dcr Betrieb, Berlin. 
Gregor, Hans, Auf tragsvergebung an Klein- und Mittelbetriebe ; Zusammenarbeit 

zwischen Gross- und Kleinbetrieb. (Excerpts from a paper read at the general 

meeting of the Verein Deutscher Ingenieure, 1939) August 1939, p. 373. 
Der Vierjahresplan, Berlin. 
Schramm, Ferdinant, "Neue Austrichtung des Handwerks," Vol. Ill, No. 6, 

p. 461, March 23, 1939. 
Kuttler, Nic. Das deutsche Handwerk im vollen Leistungsaufstieg, Vol III, 

No. 17, p. 1028, September 5, 1939. 
Zhdt., Handwerksforderung in der Kriegswirtschaft, Vol. Ill, No. 21, P. 1251, 

November 5, 1939. 
Landfried, Friedrich, Steuerung des Auftragswesens, Vol. Ill, No. 15, p. 914, 

August 5, 1939. 
Landfried, Friedrich, Zusammenarbeit von Staat und Organisation der gcwerb- 

lichen Wirtschaft in der Kriegswirtschaft, Vol. Ill, No. 23, p. 1320, December 

Der deutscJie Volksivirt, Berlin. 

Das Handwerk in der Kriegswirtschaft, February 16, 1940. 
Baumgarten, Hans, Bewahrte Auftragsstreuung, March 1, 1940. 
Hoppe, Kurt, Erste Erfahrungen der Ostdeutschen Auftragsborse, September 20, 

Vermittlungsprovision bei offeutlichen Auftriigen, Sept. 27, 1940. 
Schliler, F., Handwerk-Briicke zur SelbstJindigkeit, January 3, 1941. 
Streuung, nicht Zersplitterung, April 4, 1941. 

Schwantag, K., LSO-Preisbildung bei UnterUeferern, April 4, 1941. 
Scattered references in : 
Fravkfnrter Zeitimg, Frankfurt a. M. 
Der Aufban, Alleiniges amtliches Organ der NSDAP und der DAF fiir Handel 

und Handwerk, Berlin. 
The annual reports of various Handwerkskammem. 



Appendix II. Examples of Wokk Pieces Stjitable for Subcontractors 

[From Hans Gregor, Auftragsvergebunsr an Klein- und Mittelbetriebe. Zusammenarbeit 
zwischen Gross- und Kleinbetrieb, published in "Maschinenbau. Der Betrieb," August 
1939, p. 373] 











of special pieces to be completely 
finished if possible, since their 
manufacture would not fit into 
tlie primary contractor's organ- 

DlNii96 -c 



Series of small items which at 
present would unfavorably bur- 
den the manufacturing schedule 
of the primary contractor. 


Special processing of series of 
pieces which could not be finished 
on time by the primary plant be- 
cause of overburdening of its cor- 
responding equipment. 


Series of pieces for which spe- 
cial equipment is not available, 
such as galvanizing plants, sheet 
metal departments, automatic 

[Dimensions in millimeters] 


Appendix III. Organization Methods foe Subcontr^vots as Usrd by German 


[Same source as appendix II] 

Orders to subcontractors are passed on by the time study department to a 
special department particularly entrusted with placing these contracts on the 
outside. This special placement department receives the proper forms developed 
for internal use, such as index cards or working plans giving a detailed step-by- 
step description of the treatment of the workpiece. This department keeps a 
card index indicating subcontracting firms and showing blueprint numbers of 
formerly placed orders. When the new order is placed, either the card is supple- 
mented accordingly or a new one is filled, indicating the ordei*, number of pieces, 
price, working data, material, date of delivery, and internal order number for 
the purchasing department. Simultaneously, all available means are compiled 
to facilitate matters for the subcontractor. 

German experience shows that difficulties are often met in the use of the final 
shop drawing containing all designations, and of the detailed working order. 
Many plants are not yet used to this sort of description, and, furthermore, the 
condition of the piece before it is actually worked is not immediately evident. 
Particularly significant are (1) instructions on the drawings concerning standards 
to be used, e. g., for fitting, designations of treatments, description of tapers, etc., 
which require up-to-date knowledge of the present state of standardization, and 
(2) indications of plant standards for commercial tolerances, lay-outs, and radii, 
and also hints regarding heat treatment. 

Of great help is a drawing showing the processed stage of the workpiece ready 
for delivery to the primary contractor. Wherever necessary, all dimensions are 
specified with tolerances according to the rules of German standardization. The 
plant standards for commercial tolerances, adapted to those required by the army, 
are incorporated in the drawing, as well as the finishing details. The drawings 
are always accompanied by the working plan prescribing the practical working 
process and its various steps. Often this plan has to be supplemented by special 
explanations. As mentioned before, the primary contractor renders further assist- 
ance by providing jigs and tools or their drawings, or even skilled labor. 

German experience and regulations require that all defects be pointed out after 
delivery of the first samples. Personal discussion is always recommended. In 
case of excessive complaints, experts have to be sent to the subcontractor's plant 
in order to influence management and i^ersonnel. For each delivery received, the 
primary contractor makes out an inspection report, comparing the given specifi- 
cations with the results of the inspection, itemizing waste and parts needing ad- 
justment and the costs accrued. The question of where to do the repair work 
has already been discussed (see B). The subcontractor receives a carbon copy 
of the report, together with a printed form letter informing him what he is going 
to be charged or credited with at the end of the month. Thus he is enabled 
to file his appeal before his account has been debited. It must plainly be pointed 
out that this report should be regarded entirely as constructive criticism. 

According to German trade magazines, the following are the defects most often 
experienced with subcontractors : Eccentricity, resulting either in inaccurate sub- 
sequent work or, if the prescribed tooling allowance is not observed, in lack of 
material on the finished piece ; incorrect distances or dimensions ; inadequate 
centrations ; insufiiciently bevelled edges or poorly burred surfaces ; lathe grooves. 
Many complaints relate to incorrect heat treatment due to lack of technical 
knowledge or an insufficient equipment at the subcontractor's plant. 


Mr. Sparkman. In the resume of your statement I find this 
quotation : 

It is highly important to realize that subcontracting is a two-way pi'ocess. 
There is no use in organizing pools and other production agencies to receive orders 
unless there is a parallel progress in making orders available. 


Which brings up the question of procurement, and with reference to 
procurement you have this to say : 

The supply agencies do not utilize to an appreciable extent the services of 
production and industrial engineers. 

Will you please enlarge on that point ? 

Mr, CooKE. I have enlarged on it there in my statement. To a 
group such as you have on your panel, it is strange that there are any 
industrial engineers left in the country who are not engaged on 
defense, because anyone of us tackling the problem of improving 
the effectiveness, efficiency, and output of an individual plant would 
immediately recruit an adequate staff for that purpose. To put 
our defense program on a basis comparable with the accepted stand- 
ards of production engineering means a large and widely distributed 

The Civil Service Commission, operating the roster of technical and 
scientific specialists, recruited a list of 200 industrial engineers, 
and had it completed back in March, Three months later I tele- 
phoned the Commission to find out what the flow had been, and 
they told me that there had been one inquiry and no record of any 


As I say, that sort of situation is unthinkable from the viewpoint 
of the group you have here this morning. Those engineers ought to 
have been gobbled up at once. I don't think there is an appreciation 
on the part of the procurement agencies of the necessity for utiliz- 
ing production, management, industrial, and processing engineers, 
if they are going to speak effectively to their contractors. 

In our early correspondence from England we w^ere advised to 
avoid the buyer-seller type, not because there is anything to be said 
against buyers and sellers in their place. But in building a proper 
production organization, we were cautioned to avoid the buyer-seller 
lype_ and try to utilize the engineers, especially the production engi- 
neering type, and the figures show that that has not been done, 

Mr, Sparkman. It is your conviction that these men who are trained 
to be experts in production and full utilization of productive capaci- 
ties ought to be used by the Government at this time, when we are 
trying to speed up the production program ? 

Mr, Cooke. The supplv of such men is limited, and it should have 
been exhausted for defense, I remarked only yesterday to Mr. 
Flemming, of the Civil Service Commission, that we see the demand 
beginning to come in now, as the various agencies discover that they 
are not getting the output they want, and which thev are now realizing 
they should have. There is beginning to be an inquiry for men of that 

Now, I dislike to express it in figures, but my judgment is that in 
the course of 3 or 4 months an extensive demand will have developed ; 
so I suggested to Mr, Flemming that the Civil Service Commission 
should appomt somebody qualified in this field to see that these men 
are placed where they can be used most advantageously, because I am 
sure that it won't be many months before the supply will have been 


Mr. Sparkman, I was impressed by one statement in your paper, 
that "our attention should be turned first not to making work for 
those who do not have it but to getting done by every possible means 
the huge volume of defense production which we need." It is your 
belief, is it not, that if you get that production volume coming, work 
will be provided for those who need it ? 

Mr. Cooke. Absolutely. It is just another aspect of what Dr. Person 

Mr. Sparkman. You argue for the use of industrial or production 
engineers in order to hasten that production volume? 

Mr. CooKE. Yes; and I argue for coordinating the effort on a na- 
tional basis. My view is that every machine and every individual 
must automatically be made a part of a vast production engine that 
will give us the outputs we are dreaming about — make us in fact 
the "Arsenal of Democracy." 

It would have been much better — I can see the psychological 
mipossibility of it, but I still say it would have been much better — 
if, when it was first proposed a year ago last July, we had under- 
taken an engineering study of what was needed. Let us say, it was 
to be $120,000,000,000 worth of defense materiel. If that had been 
determined w^e would immediately have scaled the thing out so as 
to produce that materiel as and when wanted. 

When you plan a water-power site, you don't plan to build a struc- 
ture that will use a part of the available power now and a part of it 
at some other time. That just doesn't work. You plan the whole 
thing, and you install the machinery necessary to produce what you 
need at any given time. If it had been definitely stated that the 
defense program would require appropriations of approximately 
$120,000,000,000 — and I believe we will be there presently — and if 
an engineering study had been the basis of that estimate, we could 
have acted very much more intelligently. Our present procedure has 
been, from the start, one of nibbling at the problem. We engineers 
believe in seeing what the problem is, and then going to it. 

Mr. Sparkman. You indicate in your statement that the failure 
sufficiently to utilize engineering ability is an essential feature of 
what you call the "legalistic attitude" of the Army, the Navy, and 
the Maritime Commission toward procurement. Would you explain 
that a little further? Is that the same thing that you referred to 
as "nibbling"? 

Mr. Cooke. It is a phase of nibbling. I think the public is respon- 
sible for a very large part of the nibbling. The public hasn't waked 
up to the size of the problem, any more than some of the people 
in the Government have, and they react on each other. 

I have tried to point out the difference between procurement and 
production. Procurement is obviously a peacetime approach to the 
acquisition of materiel, in which neither volume nor tempo is ter- 
ribly important. In fact, in trying to find work for Army officers, 
the man who can intelligently string it out is probably the better 
peacetime employee. But coming into war, there is a physchological 
difficult}^ of getting verve into their work. 

There are other reasons, too, why the approach of military pro- 
curement officers to this problem is inadequate in time of emergency. 
They feel that if they "fuss," as it might be expressed, with the work 
of the contractor, they might not get as good a product as they would 


if they left it entirely to the man who knows how to turn out the 

Then there is the legalistic attitude. It dominates the thinking of 
these officers. They feel that any interference on their part may 
affect in some way the legal validity of the contract. 

But the chief difficulty is that these men are thinking in terms of 
procurement figures rather than production figures. If, alongside of 
the procurement hierarchy, there should be laid a hierarchy of pro- 
duction specialists — always under the Army, under military con- 
trol — then I think we would begin to see things happen, 


Mr. Sparkman. In your statement you make reference to the prac- 
tice of English engineers of "exploding" ^ materiel, such as a tank, 
into its constituent parts so that the manufacturers might see what 
those parts are. Would you elaborate on that ? 

Mr. Cooke. That is quite a common practice in England. Though 
I have no proof, I imagine that it is carried even further in Ger- 
many. Mr. Henry has just handed me a picture of the M3 tank 
that you might want to look at.^ Obviously, only a big concern can 
bid on this kind of item or even consider making it. I don't know 
whether it is that particular tank, but there is one of them that has 
30,000 parts, and 5,000 of them are different. In "exploding" such 
a product, you tear it apart, figuratively speaking, and spread the 
pieces out on the floor, and make pictures of them, so that a man 
can come along and say, "I can make a lot of those on my machinery.'" 

Mr. Curtis. Isn't that what they are doing in the defense trains? 

Mr. Cooke. I know there are such trains, but I really don't know 
Avhat tlie exliibits are going to be. I don't think that will turn out 
to be quite \^hat I have in mind. They are going to have exhibits 
of things that the A rmy uses. 

The Germans, as any of you who have been abroad know, have in 
practically all the smaller towns sidewalk markets where you can 
buy things — shoes, jewelry, and the like. And in Germany they also 
have exactly the same thing for military goods. They have bourses, 
sidewalk places, where one can go and look about anci see what Ger- 
maii}'^ wants. There a man can bid, either for himself or by getting 
together with others in a group. ]Mr. Henr}^ suggests that is the 
Leipzig Fair. 

At any rate, until we do break these items of materiel apart, 
there is no chance for the little fellow to get in. 

In the last few days I have got the details of the Oerlikon gun. 
I have discussed that in my extended statement. Mr. Antoine Gazda, 
the inventor of that gun, manufactured it in Switzerland until he was 
surrounded, and then presumably he stuffed his pockets full of blue- 
prints and came to this country and started in to inquire for a plant 
where he could build the guns the way he had built them in Switzer- 
land. The Rhode Island Industrial Commission told him they had 
no such plant, and to build one would take a long time, "so why not 
let us help you build it through subcontracts?" This was done, and 

1 "Exploding," as used here, is an English term meaning breaking down of an item of 
materiel into its component assemblies and parts. 
1 See p. 8074A. 

60396— 41— pt. 20 5 


now there must be 50 or 75 different concerns that have made parts 
of that gun. It is now being made in 8 or 10 States, if my memory 
serves me right. It is* a good example of a thoroughly successful 
scheme of manufacture. The gun is a complex mechanism, made by 
subcontracting, sub-subcontracting, and sub-sub-subcontracting. 

Mr. Curtis. Your point is that when we look at a complex mecha- 
nism like a tank, we see it as a whole, whereas 

Mr. CooKE. AVhereas a tank is a tank, and it isn't. That is to say, 
it is an assembly of thousands of constituent parts. 

Mr. Curtis. And only a big concern could hope to manufacture 
that assembly, whereas if it were broken into its 30,000 parts, there 
is no telling how many manufacturers might contribute to the 
production of that tank. 

Mr. Cooke. That is right. It is no criticism of the Baldwin 
Locomotive Works or the American Locomotive Co., or any of the 
others that got those contracts, that when they first started on them 
they knew as little about it as anyone else. They had to start in and 
"explode" the tanks for their own information. 

Mr. Sparkman. You refer to "clearing centers" in the program 
of production. Will you tell us what you mean by that and how 
they can be utilized? 


Mr. CoOKE. Clearing centers for excess production facilities are 
operating in England, and in at least one place in this country. The 
one I am most familiar with is operated in Providence, R. I., under 
the auspices of the Rhode Island Industrial Commission. There are 
700 metal-working plants in the Providence area. As I recall it, 200 
of them are completely loaded, so that the clearing center operates 
among only about 500. It has in its office a complete inventory of 
every machine tool in those plants. A check-up is made every Thurs- 
day. The operating method is so worked out with syilibols that one 
girl on the end of a telephone on Thursday is able to call up these 
plants and find out what they have that is idle in the way of ma- 
chinery. This information is assembled and published in a ncAvs- 
paper — in the Providence Journal, I think it is — once a week. It 
includes the number of machine-hours on all types of machinery 
that are available. During the week anybody who wants extra work 
done contacts the clearing center. Let us say I am a contractor, 
making some parts for the Oerlikon Gun, and I have some tooling 
that I want done. I call up the clearing center and within a short 
time they can tell me where that can be done. On the other hand, 
suppose somebody unexpectedly finds a machine liberated in his plant. 
He calls up the center and says, "This machine is open. Do you 
know anybody who can use it?" The operation of one of these 
clearing centers in London recently was described by a labor leader 
who came over here, and who serves on one of the tank boards. He 
said, "We completed about 15 percent of the requests when we 
started in, and we are now completing about 85 percent of them." 
And Providence says that they take care of 80 percent of them. It 
is a marvelous thing, and there is no reason why greater use should 
not be made of that system. In the Middlesex area they have 4,000 


metal-working concerns and 10 clearing centers. I think we should 
have 200 of these centers in this country. The technique is all worked 
out, and they could get started almost overnight. 

Mr. Sparkman. Did you say the one in Providence is the only one 
you know of in this country ? 

Mr. CooKE. The only one I am familiar with as to details of oper- 

Mr. Sparkman. What is the difference between a clearing center 
and a pool? 

Mr. Cooke. You might have a number of pools operating within 
the area controlled by a clearing center. A pool, as we have been 
using the term, is formed when two or more manufacturers come 
together and decide : "Now, we haven't got the machinery with which 
to carry out any orders we know about. We associate ourselves, and 
possibly other people, and in that way we may build up the necessary 
facilities." The pools would use the clearing center. One of the 
most interesting instances of the pooling of machine facilities, which 
I have cited in my extended report, was described last week by Sir 
Herbert Gepp, from Australia. You may recall that the President 
said to Mr. Knudsen and Mr. Hillman that he wanted the machine 
tools of the country used — even those "in the garage in Hyde Park." 
That idea rather fascinated me. Then Sir Herbert told us that they 
had formed a pool of 50 garages in Australia, and he had a news- 
paper account, showing pictures of the things they were making. 
They had turned out, in the first 7 weeks, a quarter of a million 
dollars' worth of work, and with only 1 percent rejections. I think 
that unless we grasp the idea that we are going to use everybody, 
we are going to fail. Relatively, we shall merely enter into another 
phase of our nibbling. 

Mr. Sparkman. In getting those clearing centers and pools into 
operation, is there any difficulty growing out of the reluctance of the 
persons concerned to share their experiences and problems? 

cooperation between manufacturers 

Mr. Cooke. I don't think there is any trouble getting them started, 
but to get the full measure of cooperation takes time. One of the 
most remarkable things about the Providence center is that big con- 
cerns like Brown & Sharpe allow their machines to be used by outside 
concerns. That has never been heard of. There are certain types 
of machines, like boring mills, which they have to have, but which 
they don't use much ; and I think up to a couple of years ago it would 
have been unheard of for a manufacturer to invite anybody to use 
his boring mill. 

Mr. Sparkman. Mr. Cooke, a short time ago you said the failure 
of the production program to get going was partly the fault of the 
public, because people did not understand the magnitude of the 
program and of the demands to be made on them. Of course you 
didn't intend to attach any blame to the public for not understanding. 

Mr. CooKE. I share it. 

Mr. Sparkman. None of us knows the real magnitude of our pros- 
pective defense need. But it is your feeling that when the public 
is made aware of the demands that are going to be made on it, it 
will cooperate fully in this program. 


Mr. Cooke. The only way to get going is to get its cooperation. 

The Chairman. Tliank you, Mr. Cooke. Our next witness is Mr. 
Henry. Mr. Henry, Congressman Curtis will ask you a few 

Mr. Curtis. I have gone over your paper and it will be placed in 
the record in its entirety. 

(The paper referred to above is as follows:) 


Labor dislocations on an extensive scale are now unavoidable in the shift that 
is being made from a peacetime economy to one that must become devoted far 
more than it is now to the production of war materiel. From 25 to 30 percent 
of our productive capacity will be on defense work in a few weeks ; it must b€ 
double that. Lack of planning during the last year now makes it impossible to 
prevent the temporary loss of jobs of hundreds of thousands of men and women 
when such a shift becomes effective. But it is not too late to reduce enormously 
the number of workers so affected, if quick action is taken along lines that have 
been largely ignored to date in placing defense orders. 

Buying procedure thus far "for most lines of defense products has followed 
entirely too much the normal Government methods of doing business. Too many 
of those who have the authority to place orders have been unwilling to adopt 
policies that they may consider revolutionary. This unwillingness to accept re- 
sponsibility for the limited number of inevitable mistakes that will be made in 
adopting such new policies is so evident that it needs no elaboration. 

Meantime, curtailment of production of hundreds of types of civilian goods is 
beginning to spread rapidly. It is certain to become very extensive soon. Unless 
some of these revolutionary steps in the placing of defense orders are taken imme- 
diately, the number of people who will be out of a job in the next few months 
will be far in excess of the estimates of a few weeks ago. 

The time for optimistic statements and expectations has passed. The country 
is confronted with a crisis in unemployment that still may be eased greatly, pro- 
vided courageous leadership capable of doing a highly specialized management 
job is at once given the green light. 

Generalizations such as these are easy to make. The question is how to get 
results. In other words, how to speed up defense production, and at the same 
time create jobs for those being thrown out of work in civilian-goods industries. 

There are so many lines along which action might be taken that a few specific 
illustrations will serve best to prove the possibilities. Take the metal-working 
capacity of the country ; that is, the machines which cut up, shape, and otherwise 
prepare steel, copper, brass, aluminum, and other materials into the parts that 
make guns, trucks, planes, and all of the mechanical equipment required by the 
Army and the Navy. In a word, the big and little machine shops. 


This metal-working capacity of the country — capacity vital to defense — is now 
working far less than it should. No recent reliable estimates are available, but 
the entire metal-working capacity of the country is said to be in use around 50 
hours a week on the average. Full capacity, on a basis of three 8-hour shifts 
6 days a week, would mean 144 hours ; on a basis of two 10-hour shifts 6 days a 
week tlie total would be 120 hours. But anyone who knows plant operation realizes 
that in some lines of machine-shop operations it is diflicult to keep production 
balanced. Allowing for these limitations, practical operating capacity is cer- 
tainly not far from 100 hours a week under the forced-draft conditions that must 
be maintained to meet the defense production goals that have been set. The 
Timken Roller Bearing Co., at Canton, Ohio, is working 10,000 men on a 40-hour- 
per-man-per-week basis, running its machines constantly. This means 168 hours 
a week, so the 100-hour basis is quite reasonable when management is able and 

This sums up to the fact that our metal-working capacity, one of the most 
vital lines of production in the country, is at about half its easily sustained 
output. When this situation is presented to those in authority, all sorts of 
reasons are given for the poor showing. Lack of labor and scarcity of materials 

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are those most common. But in instances that have been run down officially, 
very few cases have been found whore either lack of labor or inability to get 
supplies has prevented the machines in a shop being worked more hours per 
week than they are now. The percentage of output so affected is negligible. 

The basic causes of our failure to use the machines we have at least 50 percent 
more than they are now being worked are twofold. First, there is a lack of 
willingness on the part of too many Army and Navy officers to change the 
policies they have always followed in placing orders. Second, too many indus- 
trialists of the country have thus far failed to realize the intention of the 
country to meet the commitments the Congress has made for the production of 
arms and war supplies. Until both these handicaps are overcome, not much 
progress may be expected in increasing the use of the existing metal-working 
capacity of the country to at least 75 percent of the time per week it could 
unquestionably be operated. An average basis of 100 hours a week should really 
be the minimum goal. Keep in mind the present rate is estimated to be about 
50 hours. 

There is no need to go into detailed estimates of the number of jobs that 
would be created by stepping up the use of our metal-working capacity from 50 
hours a week to around 75 hours. The totals would certainly be in the hundreds 
of thousands. 

When such suggestions are made the first question many in management raise 
is, "Where are the men with the necessary skills?" That is a most difficult prob- 
lem. But so is winning the war. Moreover, this problem is being solved con- 
stantly by the more aggressive manufacturers of the country. 


One outstanding example is the General Electric Co., which is adding around 
1,000 employees a week to its pay rolls. General Electric is producing some of 
the most complicated and intricate armament machinery and apparatus on the 
schedules of the Army and the Navy. But it finds the necessary people constantly 
to expand its forces at a remarkable rate. 

Talks with the responsible heads of the General Electric Co. quickly disclose 
their desire to try anything that will get quicker deliveries. Hundreds of other 
industrialists have the same attitude. They find the men and the materials. 
More industrialists need that point of view. Labor also even more seriously in 
some localities needs to realize the critical situation that call for all-out effort. 
Until both management and labor more generally get a better viewpoint, progress 
in stepping up our defense output will be slower and priorities unemployment will 
be greater than either should be. 

One reaction of many in Washington who place defense orders to the idea of 
utilizing immediately more fully the existing metal-working capacity of the coun- 
try, is that outstanding orders are being delivered remarkably well on schedule. 
But how about speeding up the schedules? Certainly far more than we are get- 
ting is needed at the earliest possible date. Increasing the use of the metal- 
working capacity we already have by half will secure that speed-up quickly. 


Much of this speed-up could be had before plants yet to be built may be more 
than half ready to run. At the same time, hundreds of thousands of workers who 
are facing idleness may, by this greater of existing capacity, be given a job 
within a reasonable distance of where they now live. If advantage is not taken 
of this opportunity, then these workers will have to move to new locations. 
More specific instances of how existing capacity might be employed to get 
quicker deliveries than are possible from factories yet to be built could be cited. 
Take, for example, the Army's M3 tank.* 

The policy of the Army in securing tanks of this type has been to utilize 
great existing manufacturing plants or to build huge new plants. That was 
unquestionably sound, so long as there was unoccupied capacity in the existing 
plants, or so long as there was time to erect and equip entirely new factories. 
But both these conditions have passed. There are no more great idle plants 
and there is no time to build and equip great new complete plants. But there 
is an alternative which the Army has stated that it recognizes. That alterna- 

^ See photograph on oppof?ite page. 


tive is to utilize existing capacitj' that is not as fully employed as it might 
be. Army's recognition of this fact has thus far not produced any important 
results in the way of actual contracts awarded by the Army for tanks on 
the basis that the prime contractor must sublet the macliining of parts. Pur- 
chase of components of the tank, yes; but not true subcontracting, although 
there now is authority for such procedure. 

Now, to get right down to details in the carrying out of such a policy : 
Take the turret of this tank. It revolves 360° on tracks in the main frame, 
much the same as do the thousands of power shovels and cranes on everyday 
construction jobs. But the machining of these tracks has been held to require 
great fixed tools known as boring mills. Deliveries on new orders for boring 
mills are far in the future, so far that waiting for them might easily mean 
a Hitler victory. 

But there is no need to wait in the case of these tank-turret machining 
jobs. To follow other procedure does mean adopting radically different policies 
than have obtained in placing orders on most of our defense program. But it 
Is time to do some radical things. Hitler has. 

One entirely practical policy of doing this machining job would be to pool 
together in an area of reasonable radius a group of manufacturers having 
all or most of the necessary machines to produce the parts for these tanks. 
These areas may be selected, for instance, so as to include or be adjacent to 
the plants that build the full-circle-swing shovels with big boring mills designed 
to do exactly the sort of work necessary to machine and finish the tracks 
for the turrets. In most cases these boring mills are working an average of 
not more than 40 hours a week, although the plants in which they are located 
are almost entirely on defense work and are operating the rest of their 
machines more hours than usual. 

Objection might be raised to the impracticability of shipping the huge tank 
castings to the existing shovel and crane plants having the boring mills. But 
for years some of these shovel manufacturers shipped their heavy base 
steel castings to other factories for exactly the same operation. They found 
it practical in a competitive situation, certainly it ought not to be impractical 
under the urge of war needs. 

There likewise is the possibility of specially designed single-purpose tools 
being developed as satisfactory substitutes for the highly complicated standard 
machines built to do a variety of work. Such an opportunity occurs in the 
development of a tool to do the single job of inachining tlfe races of the 
tank turret in place of the multipurpose boring mill. 

These kinds of special tools might not be justified economically in a com- 
petitive peacetime industrial picture. As a method of obtaining quick deliver- 
ies and of meeting critical shortages they offer important possibilities. With 
them, it is possible in many cases to piece out existing installed metal-working 
capacity now operating only part time, or about to be made idle by curtail- 
ment of civilian-goods production. By combination of such existing equipment 
there are large opportunities td employ workers who will be made idle by 
the pending reduction in peacetime products. 

These are merely a few of many opportunities for utilizing metal-working 
capacity already installed to do two things: First, to get more defense pro- 
duction quickly ; second, to provide employment for great numbers of workers 
where they are, workers who will otherwise have to shift to new locations 
for a job. The chief difficulties in taking advantage of these opportunities 
lie in the inertia of those who can make the decisions on radically new buying 
procedures. The Congress has given them the authority. Until that inertia 
is overcome, few results may be expected and unemployment is certain to be 
far greater than it should. 


Mr. Curtis. As I gather, you have made two principal points, and 
they have been tied to one another. One is your criticism of military 
procurement and the other is your criticism of the idea that we must 
have newly designed machines to make what we need, instead of 


trying to utilize existing machines. For the benefit of the committee, 
would you enlarge upon those two points ? 

Mr. Henry. The military procurement officers, both Navy and 
Army, are military-minded rather than merchant-minded. Mer- 
chants like Mr. Nelson would approach the task from a merchant's 
point of view rather than from the point of view of a military 

Probably the best illustration of what I mean would be what hap- 
pened in the last war. Along in the middle of July 1918 I was asked 
to step into the Hog Island situation, which was pretty well bogged 
down. That was probably the largest subcontracting job the country 
has ever seen carried into effect. It was totally a job of assembling 
ships. There had been the lack of follow-up similar to the situa- 
tion that Mr. Person has remarked about. There hadn't been the 
pressure on delivery. For about 4 months I lived in a bag and 
made one-night stands in Pullmans on getting deliveries from about 
150 subcontractors. Until we get under way in the present situation, 
until we make the same sort of demand for more speed-up that was 
put behind Hog Island, I don't see how we are going to achieve 
more complete emploj^ment of our production facilities. 

Mr. Curtis. To be specific, who should put on the pressure for 
speed ? 

Mr. Henry. My opinion is that the people who place the orders 
are the only ones who have the authority to pat on the pressure. 

Mr. Curtis. Instead of assuming that the job is being done as 
quickly as possible after the contract is let, there should be a follow- 
up by technical production experts. Is that your point ? 

Mr. Henry. I think you had better go back of that a little bit. If 
I go to buy a machine and the manufacturer submits a proposition 
that he can complete the job within a year, that's when I'd begin to 
put on the pressure — before I gave him the contract. I would say: 
"That delivery isn't prompt enough. If you can't do better than 
that, we have got to get somebody who can." 

machine hours, not man hours 

Long before the contract is let, there ought to be a certainty that 
the equipment of the concern taking the contract is going to be 
worked to reasonable capacity; and I mean by that, not working all 
machinery one shift, but, as I brought out in my statement, it is 
perfectly feasible to think of the metal-working capacity not as so 
many hours per man, but as so many hours per machine, up to 100 
hours a machine per week. 

Mr. Curtis. That is how much more than the average now? 

Mr. Henry. In my statement I mention an estimate of 50 hours a 
week as the average use of the entire metal-working capacity of the 
country at the present time. That can be verified through the 
Bureau of Labor Statistics. 

Of four leading producers in one of the most critical lines we have, 
none has more than 17 percent of its capacity on the third shift, one 
has none on the third shift, another has 8 percent on the third shift, 
and the fourth has 3 percent on the third shift. And, I repeat, those 
companies are producing one of our most urgent needs. 


From the Bureau of Labor Statistics you can get a great deal of 
information on just how some of these critical-line industries are op- 
erating, and how far short of capacity their operations are. We are 
by no manner of means up to capacity production. 

Mr. Curtis. Is labor ready for full production ? 

Mr. Henry. My answer to that question is set forth in my prepared 
statement. Timken is working 10,000 men on a 40-hour per-man per- 
week basis. This means 168 hours a week with machines running 
constantly. The company has sustained that rate of operation for 
some months. That, of course, is a management job, and a whale of a 
job. But they are doing it. General Electric is adding 1,000 men a 
week to their pay roll. 

Now, when you ask about labor, those are two outstanding examples, 
and a good many others are doing the same sort of job. 

Those are two outstanding examples; a good many others are 
doing the same sort of job. 

When we come to the question whether there is work enough to go 
around, we must consider the magnitude of the defense program. I 
haven't the figures up to the moment, but I believe $25,000,000,000 in 
contracts already has been let. Assuming the total is as high as 
$30,000,000,000— which I doubt— that means we have $30,000,000,000 
left to let on a $60,000,000,000 appropriation. Now, if we are ulti- 
mately going to appropriate $120,000,000,000 we have let 25 percent of 
our total awards to be reached within the near future. My con- 
tention is, therefore, that although labor could be found and there 
would be jobs enough to go around, we can't do it working 50 hours a 
week. We can't do it in critical defense industries. 

Mr. Curtis. You mean by working the machines 50 hours a week? 


Mr. Henry. Yes. I am referring to the estimate I mentioned a 
moment ago, of 50 hours a week as the use we are making of our 
metal-working capacity. We can't fill defense needs with operations 
that low in critical lines. These examples I gave you were given to me 
in confidence, but I can give you this information. One of the criti- 
cal industries is working 70 percent on the first shift, 25 percent on 
the second, and 5 percent on the third. It is impractical to run on a 
second ancl third shift as much as on a first, but England has found 
it better to run two 10-hour shifts rather than three 8-hour shifts, so 
the British are working about 120 hours. We are working 50 hours 
in some of our critical industries against a necessary 100, to be con- 
servative. So we have a lot of possibilities for improvement in the 
existing facilities of critical industries. 

Mr. Curtis. How would you suggest that we go about utilizing 
existing machines more than we have, machines that do not reach the 
degree of perfection which new ones would ? 

Mr. Henry. Mr. Cooke has been hammering on the use of existing 
equipment. Any concern that is in business is going to get all the 
business it can get with what it has. There is no doubt about that. 
It is Jjoing to extend deliveries just as late as it can get a backlog. 
That IS all right in private industry, but where is the defense pro- 
gram to get off? 


I was glad to hear Mr. Nelson agree with the suggestion that I had 
made, that we ought to examine all delivery dates. I think that is 
the first way to get a lot of work available quickly. Those are jobs 
on which designs have been approved, quantities determined ; all the 
factors that permit you to go ahead quickly have been fixed. Let's 
take any type of machine. Any deliveries beyond the middle of 
1942 are later than they ought to be if all the factors have been fixed — 
if designs, quantities, and requirements are known. 

Now, I feel that it is entirely possible first to get the existing con- 
tractor to speed up a lot if he knows he is going to lose the tag end 
of the contract. He can put more men on the second and third shifts. 
He can subcontract more and thus will make quicker delivery. If the 
contractor really is loaded up, as some of the defense manufacturers 
are, then there is an opportunity to say : "Take some of those deliveries 
and advance them as is practical." 

Here is an illustration of what I mean. The Pratt & Whitney 
engine for airplanes is about as intricately designed as any unit we 
have, except some of the precision instruments. Pratt & Whitney got 
up to all the production they could handle. They then gave t^^'o or 
three other airplane engine manufacturers the right to make that en- 
gine for a dollar a unit royalty, which was practically nothing. 

That sort of policy, extended to many lines, would give us much 
quicker deliveries. If we recognize the fact that we are headed not 
for a $60,000,000,000 program, but for twice that, and further that we 
have let something under $30,000,000,000 to date — in other words, 
that we have three times as much to let as we have already under con- 
tract — it is evident that we have to use everything we have in the way 
of metal-working equipment. 

Mr. Curtis. I wish you would touch a little bit more on the utiliza- 
tion of older machines, as compared with those newly designed. 

Mr. Henry. Well, do you shave with a safety razor? 

jVIr. Curtis. No. 

Mr. Henry. I use one. I expect it is 10 years old. I put a new 
blade in, and it works as well as a new one. When it comes to 
machine tools, it is largely a matter of tooling up. Now, I don't 
mean by that that the latest types of machines are not more econom- 
ical than the early types. They certainly are. But the difference 
has been in the degree of competition. If you are in a company run- 
ning with older equipment, and I have more modern equipment, I 
can produce a little cheaper than you, and I can beat you in competi- 
tion. Now that we are into a war emergency, the difference of a few 
percent in cost becomes less important. It is the output we are after 
then. If we take some of the older machines and do an intelligent job 
of tooling, we can use many of them just as effectively in getting 
production as we can the most modern types. 

Mr. Curtis. Referring to this picture ^ of this huge tank with the 
turret [indicating], what you are getting at is that somebody who 
makes turrets for cranes ought to be put to the job of making those 
tank turrets. Is that correct? 

Mr. Henry. That turret can swing full-circle, or nearly so. I 
haven't seen the details of that particular design, but I believe the 
turret revolves on a pair of tracks with a ball bearing race between 

1 See p. S074A. 


the tracks to keep it from swaying. In principle that operation is 
exactly the same that you see on shovels and cranes on construction 
jobs. Every one of the' manufacturers of those shovels and cranes has 
a boring mill, a certain type of machine tool that has a wide range 
of applications, but most of those boring mills in the shovel plants 
are used for cutting the raceways. They aren't used full-time. One 
plant that I have been connected with has one of those boring mills. 
Because of the limited need for this big unit, I doubt if that company 
today is working it more than an average of 2 hours per shift. 
There is no reason why that particular job of machining on the 
tanks couldn't be done by those boring mills. 

Mr. Curtis. Is it being done ? 

]Mr. Henry. Not by those shovel companies' boring mills. The 
boring mills in large plants like the Chrysler plant, or American Car cS: 
Foundry are building tanks in an assembly line. Their operations 
are quite different. 

Mr. C/DRTis. Is anybody working on that particular problem, or to 
obtain that objective at the present time? Or do we need to revert 
back to Mr. Cooke's suggestion that along with the procurement ex- 
pert there must be placed a production expert? 

Mr. Henry. I expect you ought to ask Mr. Odium that.^ I don't 

The Chairman. Thank you very much, Mr. Henry. Our next wit- 
ness is Mr. Taub, whose paper will be entered into the record at this 

(The paper referred to above is as follows:) 


I have been asked to give brief answers to certain questions ^ which will be 
asked of a panel incorporating Dr. Harlow S. Person, Mr. Morris L. Cooke, 
Mr. S. T. Henry, and the writer. 

One of the questions is, How can we, consistent with defense needs, more 
fully utilize existing production facilities? Some doubt is thrown on this ques- 
tion because it states "consistent with defense needs." At the moment the 
greatest drawback to the utilization of existing production facilities is the 
consistent advice that we get from the procurement agencies that the needs have 
all been covered and hence only the production facilities now under use can be 
used. It is entirely useless to organize the tremendous production facilities 
of this country unless work can be furnished for these facilities. Billions of 
dollars are released for this purpose but apparently it dries up very quickly. 

The next question is : Where does the excess capacity exist which should be 
utilized? Bearing in mind the answer to No. 1, assuming we had worked for 
distribution, our larger facilities can be found in two national groups : The 
large mass producers of durable goods industry such as motorcars and house- 
hold equipment and the small manufacturer normally running a business of 
his own, employing from two hundred to a thousand employees, sometimes used 
as a parts maker to the larger companies. Ten months ago, when I first 
returned to America, the state of mind of industries such as the motorcar 
industry was still against any interference of their normal business. Defense 
work was only acceptable to those who foresaw a jwssible cut In their output 
and these were very few. At that time the announced percentage of facilities 
available for defense work was in the neighborhood of 15 percent. Today, 
with curtailment on the premises, it is freely admitted that 50 percent of the 
facilities can be used for defense with a possibility in certain areas of extending 
this to 70 percent. We have one instance of actual practice where nearer to 

1 Floyd B. Odium, Director, Division of Contract Distribution, OflBce of Production 

2 Subsequent to the hearing it was announced that Mr. Taub had been appointed Chief 
of the Conversion Section, Contract Distribution Division of the Office of Troduction 

3 See footnote, p. 8034. 


90 percent is used. With proper planning, considerable employment can be 
absorbed without any facilities except empty buildings and a few cranes. The 
smaller manufacturer who, numerically by factory units and number of em- 
ployees, far exceeds the large manufacturer can be brought into the picture only 
if his facilities can be used to their maximum even though this maximum 
doesn't complete a project. By pooling his facilities with the facilities of 
other properly geographically placed small factories a project can be completed. 


The present practice of examining a list of machine tools and determining 
by remote control what those facilities can make excludes the greatest facility 
that America has and that is mechanical ingenuity. By allowing a pool of these 
smaller factories to examine a defense item they can determine for themselves 
whether they can make it and who else to bring to their pool to complete the 
item. This is a principle we have been working on and in Toledo have actually 
formed that community into usable pools. The same is being done for smaller 
manufacturers in Detroit and again in Newark, N. J., and an attempt will 
be made to broaden this activity. We are sure that this will bring forward 
production facilities far in excess of anything that anyone has dreamed of and 
unfortunately very far in excess of available work. 

The next question as to what industries can be most readily converted is best 
answered by saying the most difficult industry to convert is one such as the stove 
industry where most of the work is punch press and sheet metal. Defense items 
require this type of work in a very limited manner. However, that does not 
mean that if skilled pi-ess shop engineers were allowed to examine all defense 
items for the conversion of defense items from castings to stampings, that we 
might not be able to save machine tools and create work for that part of the 
durable goods industry that is being hardest hit. 

The next question is: What are the technical difficulties of converting differ- 
ent kinds of industries and different sizes of plants? The technical difficulties 
are legion but they solve themselves when facilities are pooled. A Detroit manu- 
facturer who was attending a distress meeting in Detroit told us that he had 
lost a $500,000 order because he did not have more than 5 of a certain type of 
machine and needed 25, yet around the table of discussion sat all the machines 
he could want. Small tools and jigs can be had for the breaking of bottlenecks 
because we know there are many small tool manufacturers whose facilities are 
unused. A pool of such organizations is being formed now around Detroit, which 
will eventually offer a tool capacity for the making of tools and jigs needed 
for the production of any item. It is even conceivable that a combination of small 
tool shops with some of the better stove makers with their foundries could make 
machine tools, some of which are true bottlenecks today. 

The other questions, we believe, are more or less fully answered in the above 
but I do want to underline the main drawback to the utilization of American 
facilities is the lack of defense contracts. 


Mr. Curtis. Mr. Taub, you have spent quite a little time in England, 
recently, haven't you? 

Mr. Taub. That is right. 

Mr. Curtis. What was your profession before going to England ? 

Mr. Taub. I have been an engine designer for 30 years. 

Mr. Curtis. And with whom were you associated or employed in 
this country? 

Mr. Taub. Ford, Packard, and General Motors, from 1917 to 1936. 

Mr. Curtis. And where did you go in 1936 ? 

Mr. Taub. I went to Vauxhall in England, to design a line of 
engines for that company, 

Mr. CuKTis. Is that the General Motors Co. in England? 


Mr. Taub. Yes, sir. 

Mr. CuETis. In what capacity did you serve the English Govern- 
ment when the war came on ? 

Mr. Taub. In 1939 and 1940 I served on the British Mechanization 
Board, in charge of consultation on automotive equipment, such as 
truck and tank engines. 

]\Ir. Curtis. How long did you serve the English Government ? 

Mr. Taub. From the beginning of the war until 2 months ago. 

Mr. Curtis. I wish you would elaborate upon the observations in 
your jDrepared statement, and I should like to hear any comment that 
you might like to make on the discussion we have had here this morning. 

Mr. Taub. You understand that I am a rank amateur in meetings 
of this kind. I had much rather design a tank than talk about one. 
It is easier. You can prove what you are doing very quickly. But 
I would like to revert to the questions that were in your memorandum, 
if you don't mind, because in the last 2 months, having a roving com- 
mission, I have spent most of my time on plant conversion. 


In England there naturally was a lot of conversion because "busi- 
ness as usual" pretty well died overnight. Within the first 3 months 
of war, we weren't making any automobiles except for export. Within 
6 months we were making no motorcars whatever. So it didn't take 
long to realize that we were going to convert. It was just a question 
of determining the suitability of a given plant to a particular defense 

We found by experience that we could make 3-ton trucks on an as- 
sembly line that normally handled little 10-horsepower cars. It was 
largely a question of urgency, and of how many bombs were dropping 
outside. That makes a difference. Bombs have a way of speeding 
you along. 

There was some mention made here of hours of work. It must be 
borne in mind that the night shifts in England were quite useless for 
a while, in that we had four or five interruptions during an evening. 
And we got very little good out of it. The total number of hours 
actually worked bore no comparison with the total number of hours 
on the books per month, because the men spent half of their time in 
the trenches. 

Mr. Curtis. What was the experience in England on what has been 
termed here as "exploding?"^ 

Mr. Taub. It isn't done quite that way, sir. The best thing I can 
do is to explain how a small motor-car company went about fulfill- 
ing a contract for making the 42-ton tank. The company was about 
half the size of the Studebaker Co. but had not as much equipment 
and certainly was nowhere near as up-to-date. However, there was 
some advantage in having non-up-to-date equipment. It allowed 
for a certain degree of freedom, whereas, had the company had fully 
up-to-date equipment, it would have had more single -purpose ma- 
chines in the house, and fewer that they could put immediately into 
use for the new purpose. 

iSee footnote 1, p. 8071. 


This organization had to coordinate the tank program, which 
meant to cover design, cover purchases and subcontracting. Among 
the subcontractors were 12 concerns, any one of which was several 
rimes larger than the parent company. 

The Government was betting on the management, and that com- 
pany spread the design. That is how the job was exploded. You 
can't design in a lump. You have to design in detail. So, as the 
job was developed, units were passed out to probable manufacturers, 
and by the time the job was ready, the experimental or pilot model 
was built, and the manufacturers had already made their produc- 
tion studies. But at no time was a tank built completely by some 
independent group, then burst into pieces, with someone saying, 
"Here are the pieces. Who can make them?" Always somebody in 
the industry was asked to master-mind the job as a whole. 

That is the Government's way in England of bringing to its sup- 
port the maximum of management and technical skill. They don't 
have a whole army of production engineers in the ministry of sup- 
ply. They have fairly good men as consultants, who also act as 
carriers between one group and another, but the hard-hitting gentry 
are stationed where the work is going on — which is important, and 
which is where I believe they ought to be. 

We must bear in mind that England is much smaller and more com- 
pact than America, and they can follow these methods perhaps more 
readily. But it did bring out this: That the business of building 
a tank arsenal capable of building everything in the tank was 
probably not the best way to do it ; because without explaining to you 
how many tanks are being made per day, I can say that a small 
company is able to engineer and manage the production of tanks. 

Some of the buildings in which these tanks may be assembled 
might be empty units of automobile-body makers. Floor space was 
available but no bodies are being built; and by installation of the 
proper types of hoists and cranes, tanks can be assembled there, using 
a tremendous amount of line labor — the unskilled type. That is a 
good practice on tanks. Does that cover the question you asked? 

Mr. Curtis. Yes. In our hearing in Detroit, the automobile manu- 
facturers maintained that the industry's productive equipment was by 
and large not capable of adaptation to defense work. I was glaci 
to learn that under the pressure of necessity they have in at least one 
instance increased from 15-percent convertibility to 90-percent con- 
vertibility. Do you know how much is being converted now? 

Mr. Taub. It is moving to the 50 percent mark. It depends en- 
tirely on how much work is being placed with the companies, rather 
than on the facilities that could be used. 

Mr. CuETis. Mr. Taub, can you describe what contribution such 
civilian industries as stove manufacturers and refrigerator manu- 
facturers, and the like could make to the manufacture of defense 
products? To what extent are they now being utilized? 


Mr. Taub. I can answer that question best by explaining to you 
that at present I am working on a pooling arrangement, and that 
I have spent time in three different places. In Toledo we were 
able to gather, under the auspices of the chamber of commerce, 


representatives of some 400 metal ]na.niifactiirers. A committee was 
formed to organize that group into pools. These pools have been 
formed on the basis of some knowledge as to the tj^De of defense 
work they can do, the reason being that while any one of the mem- 
bers of the pool is usually tujrned down on defense contracts for 
lack of equipment, in combination they are able to bid without re- 
questing new equipment. That procedure has been developed in 
Toledo to a point where pooled manufacturers have hired a produc- 
tion engineer as general manager, and a permanent committee has 
been set up to represent both labor and management. And they are 
now knocking at our door, saying, "We are ready with our pools. 
Where is the work?" 

We have got to heed them. We are talking about large-scale pro- 
duction, and the need for capacity. We have taken an entire city 
area to find a j^attern, and we have one now in usable form. These 
manufacturel's have now come in, and are trying to make contracts 
for work. But evidently we are not setting up a procurement agency 
to handle this type of contract. 

But we have to go on with the project, of the building of these 
pools, because that is the only way these stove and refrigerator 
people such as j^ou mention can be used. We were able to point 
out to one stove manufacturer in Detroit that the automotive in- 
dustry is short of cast-iron parts — mainly pistons. The motorcar 
manufacturers have had to substitute cast iron for aluminum because 
cast iron was practically all that could be had. The stove manu- 
facturer rushed back and tried to get his foot in the door. 

We have been able to pick out a few such items for a few in- 
dividuals, but to handle these jobs for groups as they are now grow- 
ing in size, we have to reduce the problems involved. 

Mr. Curtis. In the metal-working field, some plants have had to 
close down because of priority allocations, and perhaps some of 
these cannot be converted. We have had cited as an extreme ex- 
ample a zij^per factory. Are there very many factories for which 
there is no hopes of conversion or of participation in defense work? 


Mr. Taub. I don't think it is entirely hopeless for any large num- 
ber. I am not going to say — and nobody else can — that we can 
utilize all the 180,000 factories in this coimtry. But we are speak- 
ing about the group far enough up the line that should be used 
and that we can use. 

Zipper-factory workers, after priorities have got through with 
them, have only hands and fingers left; but they are still good 
assemblers, and in all this defense work we need assembly. It is 
not hard to imagine a zipper factory converted to assemble small 
arms, if it were hooked in some way with a large organization 
making the necessary parts. Aiid the same thing applies to larger 
factories with facilities that cannot longer be used, and which are 
to all intents and purposes just empty buildings. They, too, could 
be put to work on asseml^lies. There are few defense items in which 
assembly is not a very important item. We must bear that in mind 
in the grouping of the pools. The chances of conversion are not 
hopeless at all. 


Mr. CuKTis. Isn't it true that, assuming it has adequate machinery, 
there is no plant too small to make a distinct contribution ? 

Mr. Taub. I would draw the line, particularly as you say a "distinct 
contribution." A plant that employs 15 to 30 men might be used if 
it is near an operating defense plant, but you could hardly expect it to 
make a distinct contribution. 

Mr. Curtis. Let's change the phrasing. Could it make some contri- 
bution ? 

Mr. Taub. That depends upon the nature of the plant. For the 
majority of the extremely small plants — if we are now talking about 
those in the 20-employee bracket — substitutes or allocations of material 
would have to be arranged. A percentage of those materials would 
have to be assigned to some of them, although it would be necessary 
to carefully scrutinize it to be sure that substitutions could not be 
made. A lot of them would be in such localities and so grouped that 
you might not be able to use them. 

Mr. Curtis. Take, for example, a concern that makes garage tools. 
It is small, but it turns out several gross of a given tool a day. 
Couldn't it likewise make simple braces that go on airplanes ? 

Mr. Taub. Yes. A company capable of making several gross of 
garage tools could very easily make machine-gun mounts, and I 
wouldn't consider that a hopeless defense prospect. There are others, 
however, making imitation jewelry, and that kind of thing, that just 
haven't got the equipment. They can make "bits and pieces" for serv- 
icing defense items. 

But there are trades that don't fit in, that will be equally hurt. Those 
will be the difficult people, and for them we must find substitutions. 

The Chairman. Dr. Person, at the suggestion of Congressman 
AVelch, of California, who is sitting to the right of Congressman 
SjDarkman here, and who, though not a member of this committee, is 
a highly respected Member of the House of Representatives, I would 
like to ask you a question. Mr. Welch was very much interested in 
your testimony and in finding out if you care to express yourself on a 
situation that may affect the Rural Electrification Administration, 
which you serve as a consulting economist. Under the national- 
defense program there is going to be a drastic cut in the use of copper 
by nondefense industries. What effect will that have, if any, on the 
further electrification of farms and homes in this country ? 

Dr. Person. All right, if this is off the record. 

(Answer to question on effect, if any, of cut in use of copper on rural 
electrification given off the record.) 

The Chairman. Dr. Lamb ? 

Dr. Lamb. I have a few^ questions that I would like to ask to round 
out the record. 

First, a general question, which I shall address to the panel without 
specifying anj^ individual for an answer : 

absorption or workers 

How many additional workers do you believe could be absorbed by 
the metal-working industries if these facilities were utilized on a 
100-hour week as contrasted with the present 50-hour week? 

Mr. Henry. Assuming they still work the same number of hours per 
week, the answer is just twice as many. I think if you go to the Bureau 


of Labor Statistics, you can get a pretty accurate estimate of the actual 
number of metal workers employed in the industry, and a fairly accu- 
rate estimate of the number of working hours. If you multiply the 
total present employment by the ratio of machine hours per week that 
should be worked — 100 — to the average hours that are actually 
worked — 50 — that will give you the figure for the number of metal- 
workers who could be employed. 

Mr. Tahb. I would like to interject a thought there. If you pro- 
pose by any means at all to multiply the number of men engaged in 
the metal businesses that are going now as a whole, and if by good 
fortune we are able to bring into the band of usefulness all these others 
the question then arises, as it has in England's defense work at the 
present time : Where are you going to get the men ? 

Dr. Lamb. That was my next question. Are our present approaches 
to training adequate to build a labor supply capable of manning our 
industries efficiently, granted that we can utilize our existing facilities 
on an average of 75 to 100 hours a week ? Would you like to answer 
that, Mr. Taub ? That question has two parts, one with reference par- 
ticularly to the metalworking industry. 

Mr. Taub. I don't think that training is going along at a very satis- 
factory rate. It is training which lifts one type of workman to an- 
other level, but when you are thinking of an all-out defense effort, you 
are thinking of drawing men from other walks of life, so that you will 
have enough to man the defense effort. No ; there isn't a possibility of 
training enough of such men to meet the need that would be created by 
pressing plants to a hundred hours a week, plus all of those metal- 
working plants that should be used. 

Dr. Lamb. In other words, the proposals which have been made here 
by the panel this morning, on the basis of machine capacity and its 
full utilization, will be limited by the shortage of adequately trained 
labor, particularly in the metalworking industries? 

Mr. Taub. Yes, sir. 

Dr. Lamb. How is that problem to be overcome, assuming that all 
other factors as described here are capable of such an expansion ? 

Mr. Taub. The end, problem is to produce X number of defense 
units, and you discover that you can do that by working a hundred 
hours a week in every plant in the country. But you are assuming that 
for your defense needs the X number of defense units will be so 
large that this country cannot handle them. I don't think that is 
even barely possible. 

Dr. Lamb. You would say, then, that in spite of the probable increase 
of the defense orders from a present $30,000,000,000 to, let us say, 
$120,000,000,000, the existing and easily trainable labor force, plus the 
existing metal-working capacity, can turn out the job? 

Mr. Taub. Yes, sir. 

Dr. Lamb. That is a very encouraging prospect. 


Mr. Taub. You must bear in mind that a large percentage of this 
money goes for fairly large units, and you have not introduced the 
time element. If somebody suddenly telescoped the program, and 
said that everything must be finished by 1942, then you would have a 
problem indeed. 


Dr. Lamb. Isn't that assumed? The committee has gone around 
the country, and we have been informed that the number of contracts 
which are standing in line, so to speak, at a given plant, add up in 
some instances to 2 or 3 years' backlog. Clearly a program of 
$30,000,000,000, in those time-terms, is for all military and imme- 
diately practical purposes meaningless. The possibility of utilizing 
those materials for any early defense objectives is nil. I don't mean 
all materials, but the bulk of them. 

Mr. Taub. I understand what you are driving at, sir, and I appre- 
ciate that thought very, very keenly; but at the same time, you 
couldn't build the warships you have on schedule through the year 
1942. That is the thing I have been talking about. 

Dr. Lamb. Granted the impossibility of expecting an expansion on 
any such scale as would bring newly contracted battleships into 
effective use in 12 months' time, still we have been talking in terms 
of metalworking capacity for guides in discovering what an indi- 
vidual worker can be expected to roll off the line in 30, 60, or 90 days. 

Mr. Taub. That can be handled. We have not begun to scratch the 
capacity of normal working, without a 100-hour week. 

Dr. Lamb. Even though those contracts are also standing in line, 
as I understand they are at the present time? 

Mr. Taub. Shipbuilding may be standing in line — some of the 
larger ships. Some of the smaller ships can be handled as Mr. Ford 
did the eagle ships in the last war. That can be planned. But, 
gentlemen, we haven't begun to use even the eight or nine major 
motorcar companies, whom we criticize so severely. And behind 
them are hundreds and hundreds of other plants. 

Dr. Lamb. Would you attribute that failure to utilize the auto- 
motive capacity to a failure to give those companies contracts? 

Mr. Taub. That is right, sir. 

Dr. Lamb. Which. I take it, gets back to the contention of Dr. 
Person that the failure to utilize capacity, and incidentally to let 
contracts, traces to the lack of an over-all plan into which such 
contract-letting fits. 

legal handicaps for army and navy 

Mr. Taub. Yes; I think that is true. But I would like to underline 
here that while everybody is taking a whack at the Army — and I 
also have had some sour experiences with the Army — nevertheless. 
Army procurement officers are only the front ; and my experience with 
them is that they are limited by the law of the land and also by the 
rules of their departments. 

The Navy has one set of rules, that do not agree with the Army's 
rules, the Army's being broader. We do whack at procurement 
agencies, but I think if we look behind them, we would find that ap- 
propriations and the legal side of the picture are the two major 

It is all right to talk about planning ahead. Say that we planned 
a year ago to spend $120,000,000,000. If we had the same ideas we 
had at that time, we would be in an awful state, because we would 
hav& built a lot of new buildings, the same as we did in the original 
j[)Janning, and we would be worse off. 

60396— 41— pt. 20 6 


Dr. Lamb. I don't think the interest of the committee is in retro- 
spective considerations, of what might have been, but rather in the 
discovery of what can be done from this point out to remove impedi- 
ments in the way of defense production, such as have been pointed 
out by the members of this paneL 

Mr. Taub. May I give a specific example of what might be done ? At 
the moment the Army needs trucks. It is not ordering trucks on the 
broadest scale possible. It is getting along with the fewest it can 
safely order. That is the truck program today. There will be a con- 
tinuation of the truck program into next year. By next year a 
large part of the potential truck-making facilities will have been taken 
up with i^rograms now in preparation, and the procurement of more 
trucks is going to be difficult. We are now running into a lull. Why 
can't we take next year's truck business and throw it into this year, 
fill in the lull, and not have the headache of trying to get them when 
they will not be available ? 

i)r. Lamb. Why can't we? 

Mr. Taub. Wliy can't we? 


Dr. Lamb. If I understand Dr. Person correctly, it is his contention 
that without an over-all plan, you are bound to have lulls. Lulls can- 
not be tolerated in an adequately operating over-all plan. Is that 
correct, Dr. Person? 

Dr. Person. Correct. 

Mr. Taub. Whether we can form one over-all plan and make that 
suffice is uncertain. We know that in England there is much planning, 
and we have heard England's methods praised; but working from 
the inside, we found much that deserved no praise. They have had 
a new minister of supply every 5 or 6 months. They have had more 
shake-ups in England than even we have had here. So, what looks 
good from here is not quite so good at close range. 

Whether or not one plan, no matter how good or how comprehensive, 
would be satisfactory, I don't know. I do know this, that it would help 
if we had at least one financial plan, if we Imew that there would be 
enough money available to cover a large plan. It seems to me we 
already know that the war is going to cost at least so much, and that 
much should be provided. When the Army comes in and says, "We 
want this list of stuff," it should not have to scale down whenever 
the nonmilitary people say: "You can get along without this and 
that." I do not think encouragement to spending should be the 
order of the day, but discouragement to spending for this purpose 
shouldn't be the order of the day either. 

However, I think that laying down an over-all plan burdened with 
details as to what materials we are going to use is dangerous. We are 
then freezing our designs. We know by bitter experience that these 
fellows who are setting the pace keep changing the rules, and we'd 
like to have the ability to change our products. An over-all plan 
in detail might interfere with that. 

Dr. Lamb. I would like to amend the phrase, "an over-all plan," 
because I am not sure that it is an adequate term for what Dr. 
Person had in mind. I would say that his statement, as I read it, 
comes closer to being a description of two things: One, a series of 


control policies which are closely integrated in their operations, so 
that there is a large degree of understanding governing them, not 
only as to the division of functions, but also as to the degree of co- 
operation required; and, second, as I understand Dr. Person, some- 
thing approaching a flow-sheet of operations, and of the supply of 
materials backward, in the opposite direction from the orders and 
directives in process of development. 

Those two related items are necessary, and I would like to have 
him correct me if I am misstating him as to his plan. 

Dr. Person, That is right. We have got one job to do in the 
United States, on a national scale, and that is the formulation of 
one over-all plan which fans out maybe into a hundred different 
levels of planning. Now, the main point is that every one of these 
hundred constituent plansi must head up into the one, and not be left 
to the judgment, the vision, or the interests of a hundred different 


Dr. Lamb. In summarizing the committee's interest in the matters 
which have been discussed here today I would like to point out that 
the committee has been particularly interested in the possibilities 
of subcontracting, and incidentally — although the two are not iden- 
tical — in decentralization. The interest in these possibilities is based 
on the opportunity which they afford for a more adequate employ- 
ment, not only of our materials and facilities, but particularly — and 
this is a primary concern of the committee — employment of man- 

Excessive shifting about of population will, probably in the end 
have to be repeated in the opposite direction at some future date. In 
other words, migration toward already overcrowded defense centers 
must be followed by a round-trip migration of those people back to 
the places where they came from, with no assurance that when they 
return to these points of origin they will be able to find jobs or 

An improvement in the use of materials and manpower now would 
in large measure obviate the necessity for such excessive movement 
of workers in the filling of defense needs. Therefore, one of the 
questions which emerges from this discussion and which I should 
like to raise with the panel before closing it, is that of subcon- 

I want to make a distinction at the outset, however, between what 
might be called in-bred subcontracting — that is, the practice of a 
large corporation or group of corporations of letting subcontracts 
to its subsidiaries or affiliates — and subcontracting among dissociated 
companies and individual plants. The intracorporate type of sub- 
contracting serves useful purposes, but it is not in line with the 
discussion we have had this morning of decentralization or contract- 
ing out to uncoordinated firms and facilities. 

Now, the committee has heard that the outward-directed type of 
subcontract is being avoided because, so it has been informed, of 
the headaches and extra cost involved. For instance, the work of 
the subcontractor must be redone on occasion. 

What the committee is concerned with is how far this attitude 
exists among manufacturers, and to wliat extent it acts as a barrier 


to exactly those procedures which this panel has advocated this 
morning. We would like to hear any one of you who cares to address 
himself to that problem. 

Mr. CooKE. I would like to say that we have had, from a great 
many people from the President on down, statements favoring what 
I call "farming out," which is an emergency type of subcontracting. 
But, personally, I haven't been able to find a single instance in 
the Government service where the man who could really do it has 
done it. Now, doubtless there have been occasions, but the preju 
dice n.oainst it is so strong that I think even this committee would 
have difficulty in finding instances of its actually having taken place. 


Mr. Taub. I would have to disagree with that. I haven't had 
any experience other than full cooperation on subcontracting, and 
I have heard the Army men encourage stipulation of subcontracts 
wherever possible. In one instance, a firm holding a contract for 
one of the automatic guns — a 20-millimeter — is making 3 percent of 
the parts and farming out 97 percent. That was cited to me as an 
illustration of how well it could be done. 

Perhaps, before my time here, there may have been the situation 
Mr. Cooke describes. Mr. Cooke has been here longer than I have. 
He has perhaps had a different experience; but from my own in 
the contract-distribution group in O. P. M. and the Army, I must 
say that they all seem to be highly cooperative. To give you con- 
crete examples of what they have done is difficult because the situa- 
tion still seems to be in a state of flux. 

Dr. Lamb. From this committee's experience, in going around the 
country, I think it would be correct to say that there are many 
professions of sympathy with the subcontracting procedure, and a 
good many instances of subcontracting of the kind that I described 
earlier, subcontracting among already affiliated companies. They 
may not be tied by actually overlapping stock ownership or inter- 
locking directorates, but through operating and trade practices of 
long standing. There is no particular difficulty about those sub- 
contracts, and in fact many large-scale manufacturers have advo- 
cated to the committee the piling on of orders so there would be 
more of them. I take it that the opinion of the panel this morn- 
ing would be that that is not enough, granted that it is necessary 
to accomplish what has been advocated here, of bringing everybody 
into the job; and if that is the case, the problem that the com- 
mittee still would need to raise is, how are you going to get it? Is 
it through contract clearing centers? Is it through pools? How are 
you going to get this mass distribution of contracts and subcontracts 
on a scale which will enlist all the available capacity and man- 
power ? 


Mr. Taub. It seems to me that if Mr. Odium's department is 
going to live up to what has been said about it in the neAvspapers, 
you certainly ought to have an organization big enough to offer the 
United States an adequate mechanism for distribution of contracts. 


Assume now that they, or we — if they don't do it, we will — prepare 
the field to accept those contracts. If you have a large number of 
concerns in the field which, because they are shy a machine or so, 
are not able to accept the contract, then you just can't bring the two 
together; but if the contract distribution agency intelligently organ- 
izes individual companies into usable groups, then as defense con- 
tracts go into the field, thej'^ will find groups there waiting for work. 
That is exactly what will occur, from the standpoint of organizing 
the groups; but what will happen to the business of organizing the 
distribution of contracts is something else. 

Dr. Lamb. I would like to ask Dr. Person in this connection 
whether, in his opinion, what is lacking is an active rather than 
a passive approach to the situation which you are describing. 
Granted that there is a passive situation such as, for example, the 
getting up and authorizing of Mr. Odium's division, and the starting 
of trains around the country with certain bits and pieces laid out for 
the manufacturers, is something more in the way of activity required, 
Dr. Person, in order to make effective the set-up Mr. Taub has 
mentioned ? 

Dr. Person. You have the same perception of the answer that I have. 
Dr. Lamb — as revealed by the form of your question. It strikes me 
that it is a problem of aggressive, organized arrangement of the mat- 
ter, as against casualism. 

Now, in my main statement I made the suggestion that there should 
be a comprehensive organization of an engineering nature to plan and 
carry through the prime contracting. That is all that was implied in 
the statement; but between the lines, it should have carried with it the 
suggestion to carry clear through to subcontracting. 

As I understand it, prime contractors don't hesitate to let subcon- 
tracts to other well-known and highly respected concerns of the same 
type. But the hesitancy is in reaching out and subcontracting to the 
numerous small, less well-known, and probably less efficiently man- 
aged concerns. Those are the ones that they have in mind when they 
say the trouble is that you have to do the work over. It strikes me 
that, just as there should be from the center in Washington an aggres- 
sive, dynamic reaching out of engineering ability and organization im- 
mediately to the prime contractor, this should carry on through by 
aiding the prime contractor to organize, on a lesser but adequate scale, 
a reaching down through to their subcontractors of the class that I am 
just now talking about. In other words, the planning rule of the prime 
contractor should be to plan for the subcontractors, and it should be in 
intimate contact with the planning going on in the subcontracting 
establishment; and, of course, good planning of the prime contractor 
carries with it precise and adequate specifications, and all the technical 
information necessary to do the job right, and there isn't left a large 
area of instructions. It could be covered by the word "need." If this 
primary consideration of adequate specification and instructions to the 
last detail by the prime contractor to the subcontractor has been taken 
care of, then planning by the prime contractor should emlbrace the 
planning going on in the subcontractor's concern. That is the way 
thousands of small enterprises can be brought into the orbit of effective 
defense preparedness. 

Mr. Henry. To carry out specifically what Dr. Person said: Of 
three concerns in one type of machine tooling — without mentioning 


any names — two have national reputations and have done the job of 
subcontracting just exactly as you have said. They have taken many 
small concerns and educated them to make pretty close tolerance. 
The third concern, making the same type, has done no subcontracting. 
It has bought motors, but not done any subcontracting. They are 
all three competitive. But one has the wrong attitude. Commer- 
cially, it may be the right attitude, but he has done no subcontracting, 
and the other two have done a complete job of subcontracting. It 
is very important to understand not only the attitude in Washington, 
but also what the views are in the field. Do they want to subcon- 


Mr. Cooke. Let us assume that there are already eight concerns han- 
dling the M3 tank contracts. There isn't any doubt in my mind that 
those eight concerns ought to set up some sort of organization by 
which each has an assignment, and one of the essential parts of such 
a work would be to handle all the subcontracting. Otherwise these 
eight concerns go out on their own with various degrees of fancy sub- 
contracting, and the small man who wants to get in has to contact 
each concern. A central subcontracting system for all eight would 
work much better. That would be one way in which, on that very 
extensive tank program, you would be able to expedite your subcon- 

Mr. Taub. That has been done. They are getting together so 
there will be less duplication of effort, and whoever happens to have 
facilities will be making parts for everyone interested. The scope 
of this will grow. 

Dr. Lamb. In other words, if you were accepting bids on a given 
part, you would open that bidding to all the companies capable of 
making that part, which may be, at some time in the evolution of 
this plan, deliverable alternatively to any of these manufacturers. 

Mr. Taub. That is right. 

Mr. CooKE. According to the instructions. 

Dr. Person. I would like to make another observation, if I may. 
I notice that Congressman Curtis, in some of his questions, showed 
a very great interest in the little plants, and their possible disad- 
vantage in the matter of equipment, in comparison with larger plants. 

The following circumstance will throw some light on that : During 
the first World War, some of the largest brass concerns in New 
England were equipped with very up-to-date machinery, and in in- 
stalling it they sold their more or less obsolete equipment where they 
could in an open salvage market. This older equipment was bought 
up by a lot of concerns which began making little bits of things. 
Tney were plants employing 5 to 15 workers, and were set up around 
the New England States. After the war was over and the market 
of the brass manufacturers had disappeared, there was a period of 
8 or 9 years during which all those big concerns got along in the 
black in the production of big stuff like pipes and valves, but they 
were in the red all that time in their manufacture of spun brass and 
shell brass. The big firms couldn't compete with the little fellows 
to whom they had sold their old equipment. 

This simply shows that equipment isn't all that enters into the cal- 
culations. One hundred percent good management and 90 percent 


efficiency may go further than 100 percent efficient equipment and 
90 percent good management. 

There are other factors that matter, and I think we could rely on any 
comprehensive scheme which provided for the development of a very 
considerable amount of capacity and efficiency among these finger- 
tips of concerns that exist all over the country. 

(At this point, at the panel's request, testimony in answer 
to a question by Congressman Welch was given off the 
record. Subsequent to the hearing, permission was obtained 
from CongTessman Welch and the members of the panel to 
include a summary of relevant details of the testimony; 
and, members of the committee concurring, the following 
summary is made a part of the record : 

(Congressman Welch asked what the opinion of the panel 
was on Mr. Odium's recent statement that more than 20,000 
small firms would probably be forced out of business as a 
result of the defense program. 

(Mr. Taub indicated that it would probably prove to be 
true, considering the effect of the civilian production alloca- 
tion programs on many small businesses and the slowness 
and difficulties connected with giving them contracts, 

(Dr. Person pointed out that many small firms had very 
capable managements, and that, furthermore, there were very 
few small companies that coulcl not make some positive con- 
tribution to the defense effort. 

(Mr. Taub agreed with Dr. Person's statement, but em- 
phasized the importance of incorporating the largest indus- 
trial facilities into the program first, if defense production 
was to be maximized. Keferring specifically to the facilities 
of the eight automobile companies, he pointed out that these 
were not being fully utilized and that there are some 5,000 
other large establishments, most of which are in a similar 
situation. Behind these there are 40,000 medium-sized estab- 
lishments, he added, that should be put to work before the 
program could reach the 135,000 small establishments.— Ed.) 

The Chairman. This discussion has been highly interesting to the 
committee, and you have given us a very valuable contribution, 
gentlemen. The committee stands adjourned until tomorrow morn- 

Engineers' Panel Exhibit A — Summary of Program for Speeding 
Defense Effort and Reducing Unemployment and Migration 

(Subsequent to the hearing the following letter was received by 
the chairman :) 

Office of Production Management, 
Washington, D. C, November 5, 19A1. 
Hon. J. H. ToLAN, 

Chairman, House Committee Investigating Defense Migration, 

Washington, D. C. 
My Deab Mr. Chairman: In answer to your request we band you herewith 
a memorandum covering points to be observed in any program for the speeding 
up and improvement of defense efforts and as a means of reducing unemploy- 


ment and migration. It is a brief joint summary of the main points in the 
testimony given by our panel at your hearing on October 28. You understand 
that we speak only as individual technicians and without any right or authoriza- 
tion to represent anybody but ourselves. 

Trusting that it may be of some assistance to you in the prosecution of your 
important task and with best regards, we are 
Yours very sincerely, 

(Signed) Morris L. Cooke. 
S. T. Henry. 
H. S. Person. 
Alex Taub. 

(The following letter of acknowledgment was sent to each of the 
signers of the above letter:) 

November 18, 1941. 

Dear Mr. : This is to acknowledge receipt of the joint statement 

prepared by yourself and your colleagues following your testimony before this 
committee on October 28. 

It is indeed gratifying to us that you and your colleagues were able to agree 
on these points as a result of your testimony and mutual exchange of views 
before our committee. 
With all good wishes, I am, 
Sincerely yours, 

John H. Tolan, Chairman. 

(The memorandum referred to in the joint letter above is made a 
part of the record in accordance with instructions from the chairman. 
It is as follows :) 

Points To Be Obsejrved in Any Comprehensive De^iensb Production Program 
drafted for select (committee investigating national defense migration by 


1. The developing defense situation calls for a vastly increased production 
that will be a heavy load on industry for several years. This will call for all 
the genius and capacity which the United States possesses. 

2. The situation is a challenge to Government and to industry effectively to 
organize total capacity and provide essential materials. 

3. In thus meeting the major problem defense unemployment and defense 
migration will largely disappear. 

4. The first step toward increase of production is for prime and subcontractors 
to increase their output and make earlier deliveries by working their machines 
more hours per week. They are tooled up and their operations are organized. 
This would immediately increase employment. 

5. A second step that offers the largest unrealized possibilities for a quick 
increase in production is the farming out of defense work to plants not fully 
occupied. It is best to bring the maximum of work to existing facilities before 
moving machines or creating new plant. 

6. It is a responsibility of Government to make those necessary arrangements 
beyond the capacity of individual plants to make for themselves. 

7. Farming out, or emergency subcontracting, is always a two-way process. 
Manufacturers, no matter how small, must make their capacities known and 
go after orders. Procurement agencies and prime contractors must make their 
requii'ements known through offering of definite orders. 

8. Procurement should include the maintenance of comprehensive schedules 
of things to be bought, i. e., a shopping list. Especially the larger items of 
materiel — tanks, airplanes, antiaircraft guns — can be broken up into their sub- 
assemblies and parts, thus making parts manufacture possible for even the 
smallest plants. 

9. By pooling the complementary metal working facilities of small manu- 
facturers located within manageable geographical range it is possible to execute 
many contracts that are not feasible for small individual plants. 


10. To balance the requirements of metal working plants having on hand 
work to be done with others asking for work to do, exchanges, or capacity 
centers, should be set up in all manufacturing areas following patterns in 
successful operation at home and abroad. 

11. At all levels of procurement, military personnel conversant with details 
of design and use of defense materials should be supplemented by civilian 
production engineers conversant with production organization and follow-up 
procedures. Together they should increase both volume and tempo of production 
by routinizing follow-up procedures so as to ensure and even advance delivery 
dates. The Government must assume the responsibility for initiative not only 
in placing orders but also in scheduling and expediting operations. 

12. It is urgent there should be established within the civilian defense 
organization a section manned by production engineers of major experience and 
competence whose functions shall be to develop procedures for — 

(a) Maintaining a classified inventory of facilities, 
(6) Maintaining a classified inventory of requirements, 

(c) Keeping records of balances in detail of requirements and facilities, 

(d) Establishment of standard practices in procurement, production organi- 
zation, and production follow-up, and 

(e) Promotion of that adjustment of national facilities to requirements 
necessary for speedy increase in the volume and tempo of defense production. 

13. Any production program is necessarily contingent on the materials supply. 
We should plan immediately to increase the production or importation of any 
materials of which the supply is inadequate. Price ceilings should be raised 
where this is necessary to get results. 

14. A labor supply adequate for a vastly increased defense-production pro- 
gram can be made available through extensions in current training programs. 
The supply may further be extended through the employment of women. The 
hours worked by individuals can in many cases be lengthened. 

15. From the owner-management of the 135,000 small plants of the country may 
be recruited much of the supervisory staff necessary to handle the expanded labor 
forces of the larger defense organization. 

16. As one illustration of the theme of all these suggestions and because of its 
urgency, special efforts should be made to have as many shipbuilding requirements 
as possible fabricated outside of the yards. Through subcontracting such work 
should be scattered as widely as possible. 

17. In the meantime: 

(a) All contracts which call for deliveries after July 1, 1942, should be reviewed 
with a view to advancing delivery dates and thereby affording additional imme- 
diate employment. Some of these contracts may advantageously be renegotiated. 

(b) Any orders for new machinery and equipment must be very closely scru- 
tinized. None should be placed where machines that are idle or that might be 
rebuilt could be used instead. 

(c) Surveys of our total requirements for defense now in progress should be 
hurried to their earliest possible completion. 

Engineers' Panel Exhibit B — Employment in Metalworking In- 
dustries AND Utilization of Plant Facilities 

material submitted by a. e. hinrichs, acting commissioner. bureau of labor 
statistics, united states department of labor, washington, d. o. 

October 30, 1941. 
Mr. A. F. HiNRiCHS. 

Acting Commissioner, Bureau of Labor Statistics, 

Washington, D. C. 
Dear Mr. Hinrichs: At a hearing before this committee in Washington oft 
October 28, Mr. Morris L. Cooke referred to a series of reports of the Bureau 
of Labor Statistics on Utilization of Plant Facilities in Selected Manufacturing 
Industries Under the National Defense Program, which he indicated showed that 
70 percent of the employees were on the first shift. 

Another witness before our committee, Mr. S. T. Henry, indicated a basis for 
estimating increased employment which could be furnished by the metal working 


industries if the Bureau of Labor Statistics would be able to furnish us estimates 
of employment at present and recently provided for by the metal working 
industries. The particular metal working industries Mr. Henry referred to 
included manufacturers of machinery as well as manufacturers of various finished 
and semifinished fabricated metal products (including for example, refrigerators, 
transportation equipment, ferrous and nonferrous castings, stampings, etc.). 

In order to complete our record of Mr. Cooke's and Mr. Henry's testimonies, 
could you please furnish the committee with the complete series referred to by 
Mr. Cooke as well as the estimates of employment by the metal working 
industries indicated by Mr. S. T. Henry. 

In connection with our record of this Washington hearing we are also interested 
in obtaining estimates of the absolute number employed in each of the major 
industrial groups, broken down wherever possible into defense and nondefense 
employment. Could you also submit to us data showing recent employment trends 
on an absolute basis in each of the principal durable consumers' goods industries 
and other industries such as rubber and silk manufacturers which have been 
or are expected to be curtailed because of the defense program. We are inter- 
ested in annual averages for the years 1937-40 and monthly figures for the years 
1940 and 1941. Would it be possible for you to furnish us with this material by 
November 7? 

May I again express our appreciation of the excellent work and cooperation of 
your Bureau. 

With all good wishes, I am 

John H. Tolan, Chairmcm. 

Depaetment of Labor, 
BuitEAU of Labor Statistics, 
Washington, Novemher 18, lOJfl. 
Hon. John H. Tolan, 

House Committee Investigating Natio7ial Defense Migration, 

Washington, D. G. 
My Dear Mr. Tolan : I am enclosing the basic data which you requested in 
your letter of October 30. The attached table presents annual employment 
averages for 1937^0 and monthly averages for 1940 to date in the metal-work- 
ing industries and selected consumer goods industries as well as the major 
components of nonagricultural employment. 

In connection with your request for an employment break-down between 
defense and nondefense for the major industrial groups, I regret that it has 
not proved feasible on the basis of present data to prepare such estimates. 
On an over-all basis the Bureau of Labor Statistics has estimated that defense 
employment averaged 2,700,000 nonagricultural employees in the second quarter 
of 1941, and 3,400,000 in the third quarter of this year. The estimates include 
employment at all stages of production, exclusive of agriculture, and represent 
employment required to produce defense output over and above the current 
volume of nondefense output in the second and third quarters of 1941. 

I am also forwarding the reports on utilization of plant facilities that you 
requested. If the Bureau can be of further assistance to you, please do not 
hesitate to call upon us. 
Cordially yours, 

A. F. Hinrichs, 
Acting Commissioner of Labor Statistics. 

(The material referred to above is as follows:) 



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Estimated num'ber of wage earners in 18 defense industries by months, June 
1940 to September 1941, inclusive 


Blast furnaces, steel works, and rolling 


Foundry and machine-shop products ' 
Electrico.l machinery, apparatus, and 

supplies ' 

Smelting and refining— copper, lead, 

and zinc i _._ 

Brass, bronze, and copper products '.. 

Aluminum manufactures 2 

Machine tools ' 

Abrasives 2 

Machine-tool accessories ' 

Screw-machine products 2 

Aircraft ?._ 

Shipbuilding • 

Optical goods 2 

Instruments 2___ ., 

4 additional industries ^ ^ _ 

Total, 18 selected defense indus- 



464, 500 
385, 2n0 

220, 700 

29. 600 
82. 700 
27, 900 
64, 800 
33, 900 
19, .500 
81, 600 
88, 600 
13, 700 
20, 100 
44, 900 

1, 595, 600 



483, 600 
389, 600 

230, 900 

30, 200 
84, 400 
28, 500 
66, 400 
35, 200 

19, 600 
88, 100 
92, 600 

20, 500 
48, 800 

1, 640, 000 

436, 200 
399, 500 

237, 100 

31. 000 
29, 900 
67, 200 
34, 900 
20, 800 
97, 400 
98, 500 
13, 600 
21, 100 
52, 600 

1, 699, 000 


500. 700 

2^17, 300 

31, 300 
95. 400 
30, 700 
70, 200 
34, 700 
21, 900 
105, 400 
102, 300 
13, 900 
21, 900 
56, 200 


508, 800 
424, 100 


32, 100 

100, 800 

32, 100 

73, 000 

10, 100 

35, 700 

23, 000 


107, 400 

14, 400 

23, 400 

59, 500 

1, 817, 800 


517. 300 
437, 600 

268, 200 

32, 100 

105, 'OC 

33, 300 

75, 200 

10, 700 

37. 400 

24, 100 

123, 300 


15, 100 

24, 800 

62, 500 

1, 878, 300 


526, 300 



109, 400 

33, 400 

78, 100 

11, 100 


2.5, 300 

131, 200 


15, 700 



1, 948, 500 


Blast furnaces, stee! works, 

and rolling mills ' 

Foundry and machine shop 

products' -.- - 

Electrical machinery, ap- 
paratus and supplies ' 

Smelting and refining — cop- 
per, lead, and zinc '_- 

Brass, bronze, and copper 

products ' 

Aluminum manufactures '-- 

Machiae tools ' 

Abrasives 2 

Machme-tool accessories 2. _ _ 
Screw-machine products 2... 

Aircraft 2 

Shipbuilding! . 

Optical goods 2 

Instruments 2 

4 additional industries 2 3 

Total, 18 selected de- 
fense industries 


533, 600 
466, 700 
28/, 800 

33. 290 


34, 500 
80, 900 
11, 600 
42. 300 
26. 500 

141, 100 
130. 700 
16, 000 
26, 200 
71. 000 



541, 700 
477, 000 
303, 400 

33, 800 


34, 500 
84. 100 
12, 000 
45, fiOO 
28, 300 

149, 600 
139, 600 
16. 700 
27, 000 
77, 000 



548, 600 

491, .300 

314, 700 

34, 100 

34, 300 
86. 900 
12, 600 
48, 200 
29, 300 
148. 200 
28. 500 
81, 200 



558, 400 

516, 800 

329, 600 

31, 000 

35, 300 
89, GOO 
13, 200 
50. 700 
30. 200 
166. 000 
160. 700 
18, 100 
29, 900 
86, COO 



571, 400 

536, 200 

342, 500 

34, 500 

8J, 700 
92, 700 
13, 600 
31, 200 
176, 500, 
168, 700' 
18, 600 
21, 100 
93, 100 



585, 200 
5f 2, 900 

34, .'^O 

123, 200 
35, 100 
95, 800 
32, 300 

ISS. 500 

183, 800 
32, 800 

101, 600 




566, 800 

364, 300 

34, 800 

123, 500 

36, 000 
97. 900 
14, 100 
57, 700 

33. 400 

203, 800 

204, 200 
19, 500 

34. 000 


578, 800 
372, 300 
35, 100 

125, 000 
36 900 
99, 500 
14, 400 
59, 800 
33, SOO 

222, 900 

20, 100 
35. 400 


2 409,100 2,570,200 


584, 300 
375, 200 

126, 900 
37, 600 

100. 900 
61, 000 

34, 300 
240, 000 
23:-, 100 


35, .500 
126, 900 


1 Adjusted to 1937 Census of Manufactures levels. 

2 Adjusted to 1939 Census of Manufactures levels. 

' Aero engmes, firearms, ammunition, and explosives. 

Prepared by: Bureau of Labor Statistics, Division of Employment Statistics. 

Utilization of Plant Facilitiks in Selected Manufactueixg. Industries Under 
THE National Defense Pbogram ' 


united states department of labor, washington, d. 0. 

June 1941. 
The tempo of production has been sharply accelerated during recent 
months through the extension of multiple-shift operations and increased use of 



overtime. Many concerns which under normal peacetime conditions operated 
their plants only one shift per day, 5 or 5Mj days per weeli, according to an 
investigation recently made by the Bureau of Labor Statistics, have extended 
their operations to tvpo and three shifts per day, 6 or 7 days per week. Except 
in continuous process industries, however, there are only a few establishments 
that operate the plant continuously with four 44-hour shifts. * * * 

Multiple-shift operating schedules were predominant in all of the industries 
covered during June 1941. Thei-e were only 76 of the 935 reporting establish- 
ments which were operating exclusively on one shift per day. These were prin- 
cipally smaller establishments and together account for only 1 percent of all 
the workers covered. In the blast furnaces, steel works, and rolling mills ; chem- 
icals; and smelting and refining industries, continuous manufacturing processes 
are used and virtually all of the plants operate three shifts per day, 7 days per 
week. JMost of these plants have four shifts of workers which are rotated in 
order to keep the plant in operation continuously three shifts per day, without 
lengthening the hours of the individual worker. Average hours worked per 
wage earner in these industries, therefore, are around the 40-per-week level. 
In machine tools and machine-tool accessories, inability to secure sufficient num- 
bers of skilled workers resulted in many plants operating two long shifts in 
preference to three shifts per day. In this industry, many two-shift plants 
are operating in excess of 20 hours per day, thereby necessitating an average 
of from 14 to 15 hours of overtime per week for each worker. 

Considerable variation appears among industries in the extent to which extra 
shifts were staffed. The largest percentage of employees on other than the 
day shift occurs in blast furnaces, steel works, and rolling mills, where 47 percent 
of the wage earners were' emp'oyed on evening or night shifts. By contrast, 
in the industries manufacturing railway cars, locomotives, electrical machinery 
and equipment, in private shipyards and in chemical plants, less than 30 percent 
of all the workers were on extra-shift work. 

Some qualifications must be kept in mind with respect to the use of employ- 
ment by shifts ."^-S an indication of the degree to which plant capacity is actually 
used. Except in unusual instances we should not expect to find an equal divi- 
sion of workers employed on all shifts. For example, in steel mills operating 
continuously at full capacity, three shifts per day, half of the total plant force 
is usually occupied on the day shift. This large proportion of workers on the 
fiirst shift is explained by reason of work supplementary to basic production, such 
as repairs, maintenance, and unloading materials. A'so it may be the case that 
the operations of finishing departments are governed by the production of ingots 
and therefore may not be required to operate three full shifts to handle the entire 
ingot output. In steel, the fact that second and third shifts do not have as many 
workers as are on the first shift, is not to be interpreted as meaning that output 
could be increased significantly unless ingot production could he expanded to the 
point where finishing departments could operate three full shifts. 

In machine-tool plants, assembly departments are geared to the output of 
machine departments, and, in many instances, need not operate more than one 
shift per day until machine departments are expanded. Mnny plants in this 
industry have expanded their over-all capacity by subcontracting parts of their 
machine work. 

In private shipyards, over three-fourths of all the workers are employed on the 
day shift. According to comments from many reporting firms in this industry, 
the extensioji of night work beyond that done under cover is questionable as 
the lack of satisfactory lighting lowers efficiency and increases the danger of 
accidents. In some shipyards, however, substantial numbers of workers were 
employed on evening and night shifts. 

Despite difficulties such as those mentioned above, there undoubtedly exist wide- 
spread opportunities to increase defense production through fuller utilization of 
present plant facilities on senond and third shifts. Two urograms which will help 
toward this goal are: (1) Widespread training to develop an adenuate supply of 
skilled workers, and (2) more subcontracting, particularly of items creating 
bottlenecks in plants with unbalanced production. 
60396 — 41 — pt. 20 7 



Table 1. — Distribution of employment by shift in selected plants by industry, 

June 1941 1 


of plants 

Total en 


Percentage distribution 
of employment by shift 


of total 




Total --- - - 







Plants operating 1 shift 






53 9 

Plants operating 2 shifts 


Plants operating 3 shifts . ... 

13 1 






12 9 

Plants operating 1 shift 




14, 533 







Plants operating 2 shifts.. 


Plants operating 3 shifts. . 

12 9 

Ammunition, explosives, firearms, and ordnance 






12 8 

Plants operating 1 shift 





19 2 

Plants operating 2 shifts 


12 8 

Blast furnaces, steel works, and rolling mills 







Plants operating 1 shift 





466, 136 







Plants operating 2 shifts 


Plants operating 3 shifts . . 

20 9 


83, 962 





Plants operating 1 shift.. 





78, 732 







Plants operating 2 shifts 



Cars, electric and steam railroad 


23, 962 





Plants operating 1 shift 





Plants operating 2 shifts 



Plants operating 3 shits . 



60, 897 





Plants operating 1 shift .. 

Plants operating 2 shifts . 







Electrical machinery, apparatus, and supplies. . 


227, 224 





Plants operating 1 shift 



21, 538 









Engines, other than aero . . 


26, 383 





Plants operating 2 shifts 


24, 750 




Plants operating 3 shifts . . 









Plants operating 1 shift . 


12, 620 





Macbinc tools. . 







Plant' operating 1 shift . 


43, 706 



Plants operating 2 shifts .. . 


Plants operating 3 shifts 


> Numbered table 2 in original. 



Table 1. — Distribution of employment by shift in selected plants by industry, 
June 1941 — Continued 


of plants 

Total employment 

Percentage distribution] 
of employment by shift 


of total 




Machine-too] accessories 


12, 35fi 




7 2 

Plants operating 1 shift 





Plants operating 2 shifts 


Plants operating 3 shifts 

7 2 

Shipbuilding _.. 






4 7 

Plants operating 1 shift 


36, 049 
106, 916 



Plants operating 2 shifts 


Plants operating 3 shifts 

4 7 

Smelting and refining 






13 4 

Plants operating ! shift 

Plants operating 2 shifts 

Plants operating 3 shifts _- 


31, 152 




13 4 

* * * Overtime continued to be an important factor in increasing defense 
production. It was most widespread in the machine tools and accessories indus- 
tries wliere virtually all the workers worked overtime, averaging 13 hours 
weekly at the time of the June survey. In private shipyards, more than 80 per- 
cent of the workers average 11 hours of overtime during the week and in plants 
manufacturing firearms, ammunition, explosives, and ordnance materials, an 
average of 9'/j hours of overtime was worked by 74 percent of the wage earners 
during the week. In continuous-process industries, the use of staggered shifts 
eliminates, to a large extent, the need for overtime. Consequently, in blast 
furnaces, steel works, and rolling mills, smelting and refining, and chemicals, only 
20 to 30 percent of the wage earners worked overtime. 

The average workweek for the individual worker in a multiple-shift plant is 
dependent, to a large extent, on whether the plant or department in which he is 
employed operates two or three shifts per day. * * * Thus, the average 
worker in two-shift plants worked nearly 20 percent more hours per week than 
the average in three-shift plants. The longer workweek for workers in two- 
shift plants results from the lengthening of shifts with daily overtime as con- 
trasted with 8-hour shift schedules in three-shift plants. Overtime, therefore, 
was most extensive in two-shift plants where 82.G percent of all the workers 
worked an average of 13.2 hours of overtime during the week. In three-shift 
plants, 40.6 percent of the workers averaged 8.6 hours of overtime during the 
week, a considerable portion of this overtime being worked in departments which 
operated two long shifts. 

While some two-shift plants reported operations extending as long as 140 
hours during the week, actual production time usually occupied from 110 to 120 
hours in plants operating long sliifts, as shown by the average hours worked 
per week in these plants. In three-shift plants operating in excess of 150 hours 
during the week, average hours per worker declined, indicating the use of four 
shifts of workers to achieve continuous operation. 


Table 2. — Employment and hours worked in selected plants, June 1941 * 

Shift schedule and plant hours per week 

of plants 

Total num- 
ber of wsge 

per week 
per wage 


of workers 



hours of 
per over- 

Total, all plants 





9 4 

1-shift plants, total 





8 7 

40 to 49.9 hours 


10, P62 

2, 519 




5 7 

50 to 59.9 hours,.. 

14 6 

eo hours and over.. 

12 5 

2-shift plants, total 





13 2 

70 to 79.9 hours 


26. 632 
13, 350 



6 S 

80to89 9hours 

5 4 

90 to£9 9 hours 


100 to 1099 hours 


110 to H9.9 hours 

14 2 

120 to 129.9 hours 


130 to 139.9 hours 

17 9 

140 hours and over. 


3-shift plants, total 


1, 148, 294 



S 6 

110 to 119.9 hours 



32, 178 
54. 626 
95, 222 
44, 245 
918. 843 




120 to 129 9 hours 


130 to 139 9 hours 


140 to 149 9 hours 


l.'^O to 159 9 hours 


ICO hours and over. 


• Numbered table 4 in original. 

ConsideraMons which prevented expansion of second and third shifts were 
reported by 670 of the C35 surveyed plants. The most common deterrent vras 
a reported shortage of skilled workers. However, while o43 plants reported 
difficulties in securing- adequate numbers of skilled Vv'orkers, only 76 indicated 
it as the exclusive consideration. Other factors operated to prevent expan- 
sion in ihe remaining cases. Thus, 75 reported shortage of skilled workers 
in combination with shortages of material and equipment, and 66 reported 
a combination of of skilled workers, of supervisory personnel, and 
of materials and equipment. Shortage of materials or equipment was re- 
ported I)y 3n,5 plants, IBS of these indicating it as the sole factor preventing 
expansion of extra shift work. Lack of orders, legal restrictions, or the 
fact that pre.sent schedules are adequate under existing contracts may be 
considered as primary causes preventing expansion, and were reported by a 
total of 212 plants. 

In machine-tool plants, the skilled worker shortage was particularly acute, 
as shown by the fact that 28 plants reported it as the only deterrent to ex- 
pansion and 48 plants reported it together with other factors. The prin- 
cipal factor preventing expansion in brass, bronze, and copper plants was of materials or equipment. In this industry, 22 plants stated that 
the above shorra,ges were the only factors and 22 others indicated that ma- 
terials and equipment shortages in combination with other reasons prevented 
expansion of evening and night shifts. In the electrical industry many plants 
employ large numbers of female workers; and legal restrictions such as 
maximum hours and night work laws for women prevented the expansion 
of second and third shifts in 21 of the reporting establishments. Other plants 
in this industry were affected by shortages of skilled workers and of materials 
and equipment. 

It may be seen from the foregoing summary that wide variations exist in 
operating schedules among the defense industries and among Ihe individual 
plants in each of the industries. Further expansion in defense production 
can be accomplished through a more efficient utilization of present plant 
facilities on evening and night shifts. The principal deterrents at the present 
time are: (1) Shortages of skilled workers, (2) shortages of supplies, parts, 


and materials, and (3) lack of balance among production departments. These 
problems are being met through training programs, upgrading of workers, 
exercise of priorities, and allocation of materials, increased subcontracting and 
exparsion of bottleneck departments. 

Opebatinq Schedules in Machine-Tool Plants September 1941 

keport by bureau of labor statistics, united states department of labob, 

washington, d. c. 

Machine-tool plants continued to expand their second and third shifts between 
June and September 1941, according to preliminary reports received by the Bureau 
of Labor Statistics from firms employing more than two-thirds of the workers 
in this industry. Wage earners in 79 reporting plants increased from 63,900 in 
June to 69,000 in September — a gain of approximately 8 percent. The number 
of workers on second and third shifts increased by 12 and 22 percent, respectively, 
during the 3-mouth interval, though even in September less than a quarter of the 
workers were on the second shift and only 7.5 percent were on the third. While 
Sunday operations were still not extensive In September, a number of plants have 
increased their week end operation since June. The number of workers at work 
on Sunday during June represented 5.7 percent of the total in the 79 plants. In 
September, on the other hand, the number at work on Sunday had increased to 
9.8 percent of the total plant forces. Aggregate man-hours worked in the 79 plants 
during the surveyed week in September amounted to 3,650,000 — an increase of 
240,0110 hours over the midweek of June. 

Practically all of the workers in the reporting plants continued to work over- 
time in September. Overtime averaged 14 hours per week for 96 percent of the 
workers and showed little change since June. 

As indicated by previous surveys, the largest number of wage earners were 
employed on the main shift, inasmuch as maintenance, supply, and assembly opera- 
tions are performed principally on one shift. In September the distribution of 
all wage earners, by shift, shows 67.6 percent on the first shift, 24.9 percent on 
thesecond, and 7.5 chi: the third shift. 



House of Representatives, 
Select Committee Investigating 

National Defense Migration, 

Washington, D. G. 
The committee met in room 346, House Office Building, Wash- 
ington, D. C, at 10 a. m., pursuant to notice, Hon. John H. Tolan 
(chairman) presiding. 

Present were: Representatives John H. Tolan (chairman), of Cali- 
fornia; John J. Sparkman, of Alabama; Carl T. Curtis, of Nebraska; 
and Richard J. Welch, of California (guest). 

Also present were: Dr. Robert K. Lamb, staff director, and Mary 
Dublin, coordinator of hearings. 

The Chairman. The meeting will please come to order. Mr. Burns 
will be the first witness. Mr. Burns, we appreciate very much your 
coming here this morning. Mr. Sparkman will ask you some questions 
based on your statement. 

(The statement referred to above is as follows :) 


Laboe Displacembustt in Nondefense Industky 

Material shortages are creating job losses in hundreds of communities through- 
out this country. The metals essential for armament purposes are too scarce t6 
meet both armament and nonarmament needs. Consequently civilian industry is 
asked to give way ; increasingly it vpill find itself unable to get the materials and 
equipment necessary for sustained operations. 

Reductions in employment and production face many enterprises, especially 
small business. Many vpill be forced to shut down. Loss of work resulting from 
shortages of materials and equipment in nondefense industry can be expected to 
increase rapidly in the months ahead. 

The public awareness of this problem of priorities unemployment is indicated 
by the various estimates made of its probable size. The National Association of 
Manufacturers stated that 3,000,000 factory workers might be affected. Price 
Administrator Henderson gave 2,000,000 as the probable displacement. Mr. Floyd 
Odium, director of the Office of Production Management, Contract Distribution 
Division, also estimated a displacement of over 2,000,000. The Bureau of Em- 
ployment Security estimates 1.5 million as the number displaced. The Associated 
Industries of New York State predicted, on the basis of a survey, that some 
788,000 industrial workers would be affected in that State alone. 

The Work Pro.iects Administration has made no over-all estimate of the dis- 
plament of workers likely to be caused by material and equipment shortages. 
The estimates given above are cited to show that the problem is expected to be 
serious. Reports from the State Work Projects Administration offices show that 
dislocations and job losses are growing. The monthly Work Projects Administra- 
tion sample study of employment and unemployment showed a drop of 700,000 in 



employment from August to September. Part of this drop undoubtedly was 
caused by material shortages. 

The first real impact of material shortages will be felt during this winter. 
There seems to be no reason to expect a lessening of the difficulty in the spring and 
early summer of next year. The acceleration of ai'mament production will require 
increasing amounts of materials. Vastly increased arms production can be 
achieved only at the expense of civilian production. Consequently material short- 
ages will grow worse, and Government restrictions will become tighter during the 
course of the next year. There seems to be no basis for the optimistic view that 
restrictions will be lightened and the dislocations in nondefense employment will 
be reduced after the tirst of the year. 

The best face that can be put on the situation is that material and equipment 
shortages will slow up appreciably the expansion of total employment in the next 
year. Some hundreds of thousands of displaced workers will experience a period 
of unemployment before they find new jobs in this expansion. 

From the standpoint of job displacement, the most serious single factor in the 
situation is the Supply Priorities and Allocations Board ruling on construction 
materials. The Office of Production Management estimates that construction 
employment — defense and nondefense — will average 600,000 less in 1942 than in 
1041. To this loss in direct employment, we must add the workers who will be 
affected in the material-supply industries and trades. This combined figure 
will exceed 1,000,003 workers. 

The loss of work in the construction field and in civilian industry generally 
will be spread widely over the entire country. On the other hand, the increases 
in employment because of defense contracts is relatively concentrated in the big 
industrial centers. Twenty industrial centers have received about 60 percent 
of the contracts ; 71 percent of the awards have gone to 12 States. The incidence 
of displacement will be widespread; the incidence of absorption will be concen- 
trated. Unemployment will increase in many areas where defense stimulation 
is negligible. 

This process of widespread displacement and concentrated absorption threatens 
to become the setting for considerab'e migration, some of which will be aimless 
and fruitless. Skilled workers will migrate to places where their particular 
skills are not in demand. Unskilled and semiskilled workers will flock to defense 
centers where there is already a surplus of such workers and where relief agencies, 
housing, and public facilities are already strained. With the exception of certain 
highly technical skills, the present labor supply in most defense centers will be 
sufficient for some time to come without further migration. 

In this connection, it should be stated that the relatively low level of Work 
Projects Administration employment throughout the country (40 percent below 
the same period in 1940) may encourage migration to some extent. Workers who 
lose employment in civilian industries are not likely to get Work Projects 
Administration jobs in large numbers because (1) (Work Projects Administra- 
tion quotas are low and (2) the number now eligible but not employed by Work 
Projects Administration is greater than the number now at work on Work 
Projects Administration projects. Consequently, some of those displaced work- 
ers that cannot obtain Work Projects Administration employment are likely to 
migrate in search of defense jobs. 

In some instances (Detroit for example) local displacements will supply the 
laboi- needs of defense industries for some time to come. Migration, therefore, 
would be pointless and would add to the local relief problem in such areas. 

As already pointed out, the displacement of labor resulting from material and 
equipment shortages will occur in all parts of the country. The largest single 
industry that will be affected is the widely scattered construction industry. 
Direct and indirect employment in this industry is likely to be reduced by at least 
1,000,000 workers in liM2, compared with this year. 

Priority unemployment has begun to strike hai'd already in manufacturing in- 
dustries producing durable consumers' goods. The largest of these and the big- 
gest consumer of metals is the automobile industry, already scheduled for a 50- 
percent reduction. As testimony already presented to this committee has indi- 
cated, the defense contracts held by automobile manufacturers will only partially 
offset the effect of scheduled curtailment in passenger-car production. 

According to the Michigan Unemployment Compensation Commission, 175,000 
automobile workers in Michigan alone will lose their jobs by next January.^ At 

^ This figure assumes that hours will be reduced so that a 50-percent cut in production 
will mean only a 40-percent cut in employment. 


least 30,000 additional workers in related trade and service fields will be displaced, 
so that total displacements will amount to 205,000 by the end of January. To off- 
set this decline, the Michigan Employment Service estimates that defense em- 
ployment will increase about 8O,CO0 by January, leaving a net increase in un- 
employment of 115,000. There is little prospect that these workers will be ab- 
sorbed in defense plants before the summer of 1942. If civilian production 
quotas are lowered still further, the period of reabsorption will extend to the end 
of 1942. 

Throughout the country the curtailment of automobile production will affect 
supply firms, assembly plants, dealers, and service agencies adversely. Other 
industries that depend in large part on automobile production will be forced to 
curtail or, if possible, to shift to defense production. As this committee has dis- 
closed, shifts of this sort are often attended by loss of work and other disruptions. 

An Office of Production Management order effective September 30, reducing the 
output of mechanical refrigerators to 43 percent of average monthly sales during 
fiscal 1941, will reduce employment in the industry by about 17,001 Additional 
displacements will occur in factories supplying parts and in sales forces. Scarcity 
of materials is likely to compel the industry to curtail prodirction more drastically 
than the Office of Production Management requirement. This industry is largely 
concentrated in areas having relatively little defense work. 

The curtailment plan for washing machines is about the same as for refriger- 
ators. Radio-set manufacturers have already begun to curtail production to 
some extent. Prodircers of most electrical appliances are expected to face per- 
centage cuts similar to those for refrigerators and washing machines. Aluminum, 
copper, nickel, chromium, and their alloys are the materials that will be rationed 
to the electrical-appliance companies. 

The laundry-equipment industry, manufacturing domestic washers and ironers, 
faces a 30-percent curtailment order. When supply firms and salesmen are in- 
cluded, this will mean that approximately 13 500 workers will be laid off. 

A wave of shortages in many vital chemicals will hit soon. The affected 
civilian-product indirstries include users of dyes, plastic manufactures, the paper 
industry, paints and varnishes, and perhaps the glass and soap industries. 

The recent Supply Priorities and Allocation Board order limiting the use of 
copper and brass will strike at a wide range of industries. These are among the 
most widely used metals and curtailment of their use in nondefense industry will 
limit employment in this field. 


Work Projects Administration State and local administrators are supplying us 
with current information regarding the effect of material shortages on the em- 
ployment situation. The Indiana State administrator, for instance, has informed 
us that reports from 40 plants indicate that 3,690 employees had been laid off by 
September 15, and that an additional 5,595 are scheduled to lose their jobs. Cur- 
tailments in automobiles and automobile parts were chiefly responsible, but stoves, 
furnaces, refrigerators, wire and cable, and structural steel for bridges were 
also involved. 

The employment outlook in Evansville, Ind., is illustrative of the type of situa- 
tion that calls for forthright remedial measures. Five hundred workei-s in the 
automobile industry have lost their jobs. Two companies producing refriger- 
ators are preparing to dismiss 2,000 or more employees. Since there are few 
prospective job openings in the community, need for Work Projects Adminis- 
tration employment is expected to develop on a large scale. 

The Work Projects Administration State administrator for Iowa has reported 
that 10 firms have laid off 767 workers and lay-cffs are threatened for an addi- 
tional 3,220. A hosiery company with 600 employees in Des Moines and Boone 
has completely closed down for lack of silk and nylon. Shortages of copper wire 
and zinc threaten to bring about dismissal of the entire force of 1,200 employees 
at a company producing dry batteries at Dubuque, a city where there is little 
likelihood of marked employment expansion in other lines. 

This Iowa report is the first to emphasize the potential effects of building- 
material shortages. Since at least 40,000 workers are employed in the construc- 
tion industry in Iowa, the prospective curtailment of operations in this field is 
likely to have a more serious effect on employment than the shortage of metals 
for manufacturing industries. 

In Ohio 179 manufacturing plants have laid off 28,000 workers. It is estimated 
that the lay-offs will amount to 100,000 during the next 6 to 9 months. Displace- 


ments in Cleveland affected 2,000 workers in September and are expected to reach 
a total of 25,000. 

Information supplied to Work Projects Administration by the Ohio State 
Employment Service indicates that aggregate lay-offs in Toledo numbered 2.500 
by eariy September and that this figure would be substantially increased. A pro- 
peller company will begin operating a new plant with about 4,000 employees, but 
not until next March. Displacements have been especially large in Mansfield 
and D;iyton as a result of the curtailment of refrigerator production. At Hamil- 
ton the Work Projects Administration State administrator reports that a stove 
manufacturer expects to begin lay-offs that will probably total 1,000. Only a 
small proportion of these workers can be placed in local industries. Substantial 
lay-offs in other areas, particularly in the smaller communities, threaten to create 
a serious unempoyment problem. 

Communities that depend largely upon a single plant or industry suffer most 
from material shortages. Belleville, Ind., for example, is faced with a serious 
problem because of the threatened curtailment of stove manufacturing, the town's 
chief industry, with 1,500 employees. Two-fifths of the total employment in Mani- 
towoc County, Wis., has been provided by the aluminum-ware industry which has 
virtually closed down. Defense contracts specially placed in this "distress area" 
have not made up the loss in nondefense employment. 


The evidence from AVork Projects Administration field reports, from the State 
employment service reports, from the Office of Production Management, surveys 
of business organizations and labor unions all point to the conclusion that (1) 
priorities unemployment is now an existing, although relatively small, problem 
and (2) that a substantial increase in displacement, probably affecting as mnny 
as 2,000 OOO workers in nondefense construction, manufacturing, and related fields 
is virtually certain to occur in the near future. 

The situation in the nondefense industries will grow worse in the course of the 
next year, not better. Although defense employment is increasing and will con- 
tinue to increase, it is by no means certain that this inci'ease will off-et displace- 
ments over the next 6 months. It should also be stressed that defense employ- 
ment is still a relatively small part of total employment. It is clear that increases 
In defense employment cannot take up all those displaced in civilian industry. 
Many civilian industries cannot shift to defense work. Part of the displaced labor 
will not be in areas where defense employment is increasing. Some will be above 
the age limits fi'equently found in industries; others will not have the 
appropriate skills and training. For the latter, much can be done by expanding 
present training programs. 

The coming months will see substantial decreases in some industries and con- 
siderable increases in defense industry. These movements will be attended by 
frictions and maladjustments and a great many workers will suffer losses in 
employment and income. 

These dislocations will become important at a time when many industries are 
undergoing seasonal declines. Agriculture, construction, trade, and some manu- 
facturing industries normally reduce employment during the winter. The normnl 
seasonal decline in the nondefense field will be intensified this year by material 
shortages. At the same time, these seasonal declines in employment will increase 
the difficulty of absorbing the priorities unemployed during the winter. 

The combined effects of the factors mentioned above will probably bring about 
a drop in employment of considerably more than 2,000,000 workers by the middle 
of winter. 


The situation created by actual and threatened material shortages calls for 
remedial and ameliorative measures by Government. Tliis problem is essentially 
a national problem, growing out of national policies, and the measures taken 
should be primarily Federah 

To place the liurden on the locality is, in effect, leaving it largely with the 
unemployed. Unemployment insurance is a first line of defense, and undoubtedly 
large numbers of workers will find other jobs before exhaustion of benefit rights. 
But many will not, and some cannot qualify for benefits in the first place. 

Along another front, efforts are being made to retrain displaced workers. The 
Work Projects Administration training program is part of this effort. Most of 
those trained thus far, however, come from the unemployed group as a whole, 


not those recently displaced. To do much for the displaced workers would re- 
quire a substantial expansion of the Work Projects Administration training 
program. A substantial in the training program for these workers with 
the limited funds now available to the Work Projects Administration could be 
brought about only at the expense of those now on the program. 

Attempts are being made by the Ofiice of Production Management to place 
defense orders in civilian-goods plants affected by material shortages. Subcon- 
tracting and otlier means of widespread distribution of defense work are being 
pushed. Although this policy may be successfull in the course of time, in the 
period under consideration there will be a substantial problem of displacement. 
The wide distribution of contracts, however successful, does not get at the root 
of the problem. This problem is one of material and equipment shortages. When 
scarce materials are being utilized to the limit, further subcontracting means 
little more than that defense jobs are provided in one plant rather than in 
another. Contract distribution spreads work, but as long as shortages exist it 
can do little to increase jobs. 

The basic remedy is to increase supplies of scarce materials, plant, and equip- 
ment. The time consumed in this expansion needs no elaboration. It is suffi- 
cient to say that the increases cannot occur fast enough to prevent widespread 
curtailment in civilian production and employment. 


With the funds available to it at the present time, the Work Projects Adminis- 
tration can do relatively little to ease the hardship arising out of priorities unem- 
ployment. ■;•■.:;; 

The appropriation for the present fiscal year is $875,000,000, enough to provide 
employment to approximately 1,000,000 workers a month. Tliere are 1,040,000 
workers on the program at the present time. 

In addition, there are approximately 1.2 million workers eligible for Work Proj- 
ects Administration emplbyment who are not at work because funds are inade- 

Each month well over 100,000 workers leave Work Projects Administration jobs, 
most of them to take private jobs. Their places on projects are taken by the eligi- 
ble workers waiting assignment. 

Because of this group of eligible workers, no large numbers of workers displaced 
because of material shortages are likely to get Work Projects Administration 
employment. It should be emphasized that each winter unemployment normally 
increases for seasonal reasons. The Work Projects Administration has always 
increased its employment to meet this seasonal problem. Priorities unemploy- 
ment will get serious just about the time that seasonal unemployment will in- 
crease the pressure for Work Projects Administration jobs. There is not enough 
money to meet all of the increased need for employment on Work Projects Admin- 
istration projects this winter. As it stands now, the priorities unemployed who 
go on local relief and become eligible for Work Projects Administration jobs 
will simply swell the large number of persons that are now waiting assignment. 

If it is the view of Congress that Work Projects Administration employment 
should be provided to displaced workers pending their absorption in industry, addi- 
tional funds will be necessary. The amount needed will, of course, depend upon 
the number to be employed. If Congress is to provide that these workers be given 
project employment, we believe such employment should be. provided on the basis 
of referral by a public employment office of those workers jobless because of 
shortages arising out of the defense program. 

An expansion of the program under a policy as outlined would occasion no diffi- 
culties. The program is geared to rapid changes. Projects are ready for immedi- 
ate prosecution. These projects would encounter no serious difficulties under the 
Supply Priorities and Allocations Board materials ruling. The Work Projects 
Administration has shifted its construction work to projects that need few metals. 
Airport grading, runway construction, roads, and similar projects require little or 
no materials that would be affected by the Supply Priorities and Allocations Board 
ruling. At the same time, these projects are essential to defense ; by using other- 
wise idle labor to construct them there is a clear gain in defense effort. At the 
same time, the personal and family tragedy of destitution is averted. 

An increase in Work Projects Administration training — both vocational school 
and in-plant training — would also be possible if additional funds were provided. 
Such training would equip displaced workers to take jobs in defense industries. 
In addition, these activities could take the direction of training workers to take 


jobs left open in the "upjrrading" shift of woi-kers from nondefense to defense 

The general situation may be summarized as follows: 

1. Material sliortages, especially in nondefense industries, are now adding to 
the jobless problem. 

2. These shortages will grow more serious in the months ahead. Construction 
and the durable-consumers-guods manufacturing. industries will be hit hardest 

3. Job displacement in nondefense work is likely to exceed job increases in 
defense work over the next 6 months. 

4. Subcontracting and other means of spreading the work are not likely to 
prevent widespread displacement for a considerable time. 

5. Unemployment insurance will be the first line of defense for most of the 
displaced workers, but its short duration and somewhat limited coverage will 
leave large numbers in need. 

6. The present appropriation gives the Work Projects Administration little 
chance to give jobs or training to any substantial number of these workers. If 
they are to get either, additional funds lor the Work Projects Administration 
will be needed. 

7. Should such a policy of providing public employment be adopted, these 
workers should be referred to project employment by a public-employment oflBce. 

8. Expansion of Work Projects Administration employment would not absorb 
materials listed as strategic defense items. 

Exhibit A. — Duplicate Registrations at Employment Offices 


It is possible for a worker to register at several employment offices. However, 
the Bureau of Employment Security states that this is a negligible factor, as 
indicated by local analyses of the records. Migratory workers sometimes register 
at several offices, but unless they return to these offices periodically their names 
are removed from the active files. This amounts to an automatic reduction of 
this neglig.ble duplication. 

The Bureau of Employment Security states that this duplication is offset 
by group placements made in many agricultural areas. Group placements of 
workers are made without the individual registration of these workers. In these 
areas, therefore, the applications and placements are imderstated by the reports. 

The over-all figures on registration at the public-employment offices, conse- 
quently, are not alTected materially by the small amount of duplicate registra- 
tion. In September 1941 there, wera 4^300,0 30. fMaopie.-re^i^tered at the public- 
employment offices. 

In the defense areas the local ^officeajclearthe,iiles.jeach.. month in order to keep 
the records current. This, of course, reduces the amount of duplication in the 

Exhibit B. — Extent of Priorities Unemployment, by States 
report by work projects administration, fedekal works agency, washington, 

D, & 

October 16, 1941. 

In the attached table the 48 States are classified on the basis of the extent 
to which they now appear to be affected by priorities unemployment. As of 
the middle of October eight States were hard hit or seriously threatened. 
These are listed below with an indication of a few of the localities most severely 
affected, either because of a large absolute volume of lay-offs or because they 
are small towns having few alternative employment opportunities: 

Illinois: Quincy, Belleville, Elgin, Rockford, and Bloomington. 

Indiana: Evansville, Anderson, Connersville, Muncie, Fort Wayne, and 

Michigan : Detroit, Flint, Muskegon, Pontiac, Lansing, Grand Rapids, Green- 
ville, Tecumseh, and Adrian. 

New Jersey : Paterson, Passaic, Burlington, Bloomfield, and Trenton. 

North Carolinn : Asheville, Burlington, Charlotte, Durham, High Point, Mor- 
ganton, and Roxboro. 



Ohio: Mansfield, Cleveland, Hamilton, Toledo, Dayton, and Cincinnati. 

Pennsylvania : Meadville, Indiana, Scranton, Wilkes-Barre, Erie, and Phila- 

Wisconsin : Manitowoc-Two Rivers, Kenosha-Racine, Ripon, Eau Claire, West 
Bend, and Milwankee. 

Tlie classification presented in the attached table does not take into account 
the possible effects of the recent Supply Priorities and Allocations Board 
order forecasting a severe curtailment of construction activity. The effects of 
this policy, on top of shortages of building materials already in evidence, will 
be widespread. Many of the States listed as "moderately involved" or "little 
involved" will be "seriously threatened" if nondefense construction is substan- 
tially shut down. The extent of the effects of such curtailment will vary directly 
with the relative importance of construction in the State's economy and in- 
versely with the amount of the State's defense activity. 

As other materials shortages develop and as additional limitation orders are 
issued more States will shift into the "seriously threatened" column. The 
present tabulation merely smnroarizes the situation as of mid-October. 

The classification is based on data available from a wide variety of sources, 
including reports by the Work Projects Administration State administrators 
in response to the assistant commissioner's lettergram of August 20. 

Extent of 'priorities unemployment, by States 

States hard hit or seriously 

States moderately involved 

States little involved 










New Jersey. 



North Carolina. 















Nevada. ' 


New Hampshire. 


New Mexico. 


North Dakota. 

New York. 



South Carolina. 

Rhode Island. 

^outh Dakota. 







West Virginia. 


Exhibit C- — Priop.ities Unemployment in Indiana 


washington, d. c. 

September 30, 1941. 

The Indiana State administrator reports that as of S3ptember 15, 3,690 
workers are known to have been laid off by 19 Indiana plants on account of 
priorities or product curtailment. The report, which provides information on a 
total of 40 industr al concerns, states further that an additional 5,595 are sched- 
uled to lose their jobs. Curtailments in the automobile and automobile parts 
industries were chiefly responsible ; 1,945 employees had been dismissed by 
September 15, and 2,335 more were expected to be laid off. 

In the other industries involved, actual or anticipated lay-offs were primarily 
due to shortages of metals (steel, aluminum, copper, zinc, nickel) in nondefense 
manufacturing. In addition to automobiles, industries most widely represented 
were stoves and furnaces, refrigerators, wire and cable, and structural steel 
for br dges. 

In relation to size of community, Connersville (population 13,000) appears to 
have been hardest hit to date. The Ilex Manufacturing Co. producing refrig- 
erator cabinets and commercial trailers dismissed 800 workers in Connersville; 
and the Stant Manufacturing Co. (auto parts) laid off 115. Of the former Rex 
Co. workers, 350 obtained work in Richmond while 450 are receiving unemploy- 
ment-compensation benefits. 


The situation in Evansville is potentially even more serious because there aru 
few prospective job openings in the community. Five hundred workers in the 
automobile industry (Chrysler and Briggs) have lost their jobs, and at the 
Sunbeam Electric Manufacturing Co. (refrigerators) it is expected that 1.500 
to 1,800 employees will be dismissed. In Evansville and nearby, the outlook 
is unfavorable for reemployment and the need for Work Projects Administra- 
tion employment is expected to develop on a large scale. Other Indiana local- 
ities where it appears that priorities unemployment may strike with special 
force are Auburn, Columbia City, Fort Wayne, Kokomo, and Muncie. 

Exhibit D. — Pkiortties Unemployment in Wisconsin 
eepoet by work projects administration, fedeeaii works agency, washington, 

D. C. 

The Work Projects Administration State administrator of Wisconsin reports 
that as of September 15, 25 manufacturing establishments for which informa- 
tion was obtainable had laid off 1,286 workers because of materials shortages 
and that additional lay-offs numbering 4,005 were anticipated.* The Wisconsin 
State Council of Defense, on the basis of information from nearly 400 companies, 
estimates that lay-offs will exceed 14,500. Displacement is likely to be greatest 
in aluminum ware, automobiles, and silk hosiery. 

A number of communities are seriously threatened because of priorities unem- 
ployment. In the ManitoWoc-Two Rivers area, where several thousand aluminum 
workers are normally employed, manufacturers have already laid off nearly a 
third of the workers. Although shipbuilding is providing expanding employment 
in Manitowoc, most of the displaced aluminum workers are not acceptable for 
this kind of employment. Present defense contracts 4t the aluminum plants are 
not sufficient to meet the existing prospective displacement.^ 

In Eau Claire a firm manufacturing aluminum pressure cookers has laid o£C 
half of its 800 employees. Some of the displaced workers are already on Work 
Projects Administration, the State administrator reports, and others will even- 
tually apply. The largest employer in Eau Claire is a rubber-tire plant with 
more than 2,500 employees. Lay-offs to mid-September numbered only about 30, 
but anticipated reduction in output was expected to cause further displacement. 
Reports from Eau Claire agree that substantial reductions in employment are 
certain to result in the need for extensive public assistance. 

The small town of Ripon may be even harder hit. A washing-machine plant 
with 445 employees provides three-fourths of the male employment in the town. 
Lay-offs at this plant numbered between 100 and 120 by September 15, and further 
dismissals are reported in prospect. 

In the Kenosha-Racine area metals-using plants fabricating consumer goods 
(Nash-Kelvinator and Simmons are the largest) and a silk-hosiery mill provide 
a large proportion of all jobs. Displacement as of September 15 numbered 600, 
with at least that many more in danger of lay-off in the near future. With 
nearly 5,000 industrial workers already unemployed in this area, further dis- 
placement presents a serious problem. 

Other localities where priorities unemployment is likely to be especially severe 
Include Milwaukee, which has large hosiery mills, automotive and other metals- 
using plants; Sheboygan (toys, kitchen utensils, light fixtures, furniture); 
Kewaunee (aluminum utensils) ; La Crosse (automotive and heating and venti- 
lating equipment) ; West Bend (aluminum utensils, washing machines). 

1 Reports of Work Projects Administration administrator for Wisconsin, dated -Beptember 
24 and October 7, sent in resf)ons8 to Mr. Gill's letters^ram of August 20. 

• Article on priorities unemployment in Wisconsin, Wall Street Journal, October 4, 1941. 


Exhibit E. — Peiorities Unemployment in the Sceanton-Wilkes-Bakre Akea of 


KEPOET by work PKOJEOTS administration, federal works agency, WASHINGTON, 

D. C. 

October 1, 1941. 

On August 2 the OflBce of Production Management prohibited the throwing, 
spinning, or other processing of raw-silk stocks, including those already in posses- 
sion of the mills. This and a subsequent order require that silk be used only for 
the production of defense items including parachutes, powder bags, and igniter 

The effect of the order on employment in the Scranton-Wilkes-Barre area was 
immediate. A field survey shows that by September 19 more than 4,200 silk 
workers had been laid off in the area, of whom 2,659 were in Scranton.^ Throwing 
was most seriously affected with a displacement of more than 3,800, or about 56 
percent of those engaged in that branch of the industry. In addition, more than 
400 weavers lost their jobs. In all, about 38 percent of the silk workers in the 
area had been laid off by September 19. 

The displacement of the silk workers seriously aggravates an unemployment 
problem that has existed in the area for some time. It is locally estimated that 
even before the silk order there were more than 50,000 unemployed workers in 
Lackawanna and Luzerne Counties. Most of these are former miners. Though 
the mines are now operating at a higher capacity than for several years, this has 
meant in most instances a longer workweek for those who are employed rather 
than an increased working force. Lackawanna County has a larger percentage 
of its population receiving relief (15.3 in August) than any other county in Penn- 
sylvania and Luzerne County has nearly as high a proportion (12.2 percent). 

The Office of Production Management arranged a meeting on September 17 and 
18 in Scranton and Wilkes-Barre in an attempt to institute the "Buifalo plan" 
for the reemployment of the displaced silk workers. An examination of the local 
situation, however, indicates that the chances of rapid reabsorption are slight. 
The possibility that a substantial proportion of the displaced workers will return 
to the silk industry within a short period of time is considered to be almost 
negligible. In general, the silk plants are awaiting further developments and so 
far have made little attempt to secure defense contracts. The industry is agreed 
that such defense contracts as may be obtained can at best provide employment 
for relatively few of the displaced workers. 

Conversion of the silk plants to the use of substitute raw materials likewise 
appears to offer little hope for reabsorption. The concerns are reluctant to con- 
vert to rayon or nylon if there is a possibility that silk will again become available. 
A few of the larger plants are making an attempt to switch over to rayon or 
nylon but the smaller plants, which account for a mnjority of the workers, are 
typically unable to finance the necessary capital investment. Moreover, there is 
little possibility that the supply of rayon cnn be immediately increased, while the 
plastics needed for nylon are already subject to priority control. 

Absorption in alternative emnlovment offers similarly small hope. The bulk 
(at least 85 percent) of the 4.200 displaced workers are women, practically 
none of whom have had any training other than that received in the silk 
mills. The only local industries which indicate a willingness to reemploy 
women workers are the garment and cigar-making industries. In both of 
these industries, however, manufacturers indicated that only trained workers 
could be employed. With regard to cigar making it is doubted whether the 
contemplated training program can readily be undertaken since it requires 
a large capital investment to simulate actual working conditions. Relatively 
few of the garment plants have received defense orders, and those which have 
other contracts have bpcn unable to get machine parts and materials, particu- 
larly findings such as buttons, snaps, zippers, silk thread, etc. A recent order 
giving a high priority rating to machine equipment and parts for the textile 
industry will alleviate this situation in some measure but the local feeling is 
that continuing disruption of supply shipments will hinder capacity production 
for months to come. 

Furthermore, even if the garment industry were in a position to absorb a 
large part of the silk workers the problem of training remains. The training 

' Thp Tiiimbpr of displaced silk workers was dlstrihntPd as follows: Scranton, 2,659; 
Wilkes-Barre, l,.^t4 : Hazleton, 184 ; Nanticoke, 58 : and Pittston, 16. Tliese figures under- 
state total lay-offs by an unknown amount, since not all firms are reported. 


program recently proposed calls for the installation of 100 power-sewing ma- 
chines. The machines, however, have not yet heen secured. With this equip- 
ment, only 100 workers can be trained every 2 months, operating one shift; 
even if classes are put on a 2- or 3-shift basis, the problem of retraining by 
this means wou d be one of several year.s' duration. There is also consider- 
able doubt as to whether many of the displaced workers will be able to qualify 
for the fast tempo required of power-machine operators. More than 65 percent 
of the disj laced women are over 27 years of age, and the garment manufac- 
turers in the past have been reluctant to hire workers over 27. 

As yet there has been little distress resulting from the displacement since 
most workers are eligible for unemployment compensation. While a few of 
the unattached girls are already moving out of the ai-ea in search of jobs 
elsewhere, it is almost inevitable that many of the displaced workers will be 
forced to apply for public assistance. A sample check of the unemployment 
compensation records shows that about one-half of the number are married ; 
of these, some 12 percent have husbands who are not working at present. Of 
tte unmaiTied women almost three-fourths have dependents. It is apparent 
that though many of those displaced are "secondary workers," their earnings 
have constituted an important part of the family income. Local relief officials 
in Scrantou feel that the first effects of the lay-offs will be felt within a month 
when increased grants will be necessary for cases already receiving relief. 
From then on it will be a case of increasing the rolls, with most of the 
workers attempting to secure Work Projects Administration employment. 

It is clear that reemployment opportunities for the 4.200 workers already 
displaced are far from bright. Moreover, it is expected that 650 additional 
workers in the throwing branch of the industry will be displaced within the 
next 30 to 60 days. By that time the materials which are now in process will 
have teen largely exhausted. The weaving branch of the industry, now em- 
ploying nearly 4,000 workers but so far not seriously affected, will begin to 
feel the effects of the decrease in the amount of yarn available and will also 
be forced to lay off large numbers of workers. 

Exhibit F. — Estimates of Additional Workers Needed by April, 1942 in 

Defense Industries 

report by work projects ADMINISITIATION, FFJ)ERAL works agency, WASHINGTON, 

D. C. 

SEPTEM3EB 11, 1941. 

The Bureau of Labor Statistics has recently estimated that a total of 1,408,581 
additional workers will be required for on-site employment in defense industries 
between April ]04] and April 1942.* This is 2.7 percent of the total labor force. 
The estimate does not cover labor requirements for all brandies of industry ; many 
of the additional workers needed will undoubtedly come from nondefeuse indus- 
tries. Such transfers will be sharply stimulated by priorities, materials short- 
ages, and product curtailments. 

In tlie 4 months since the estimate was made the increase in employment in two 
of the defense industries covered has been considerably below the rate necessary 
to reach the estimated gains. Employment statistics for the other industries 
covered are not available. In aircraft manufacturing the increase thus far has 
been a rate of about 300,000 workers per year rather than the estimated 408,441, 
while the actual increase for shijjbuilding has boon at a rate of about 240,000 
workers per year in contrast to an estimated ,S2'>,900.- Unless the rate of inci-easo 
is g: eater during the latter part of the period than thus far, the net addition for 
the year covei-od by the estimates will be closer to 1.000,000 workers than the 
estimated 1,^08,581. Moreover, as already stated, many of these workers will 
transfer from other industries. 

' V. S. Department of Labor, mimeographed release, "Defense Labor Requirements by 
Occupation" (by States) — Prepared May 20. 1941. 

^'Ti'e Biireau of labor Statistics estimates tl^at shipbuilding employment rose bv some 
00.000 in the 3 months Apr. 15 to July 15, and that aircraft employment increased 100,000 
between Apr. and Aug. 1. 




Taking the four industrial groupings together it appears that 46 percent of the 
needed workers are classified as skilled or professional and another 38 percent 
as semiskilled (table I). Only 227,483, or 16 percent, of the total needed will be 
unskilled workers. Among the individual industries there is little significant 
variation in the proportion of unskilled workers required; it amounts to 20 
percent in shipbuilding and to only 15 percent in the other three groups. 

Table I. — Additional workers required in defense industries by April 19^/2, by 
industry and by skill group ^ 

Defense industry 



and sub- 

















91, 184 


550, 8J;9 


539. 055 


227, 483 



323, COO 
408, 441 

384, 629 



32. 3G0 
32, 675 




147, 039 




71, 2."i8 
167, 460 

ISO, 776 



64, 780 
61, 267 

43, 742 


Aircraft .. . . 


Machine tools and ord- 
nance - . . . 




1 Bureau of Labor Statistics, "Preliminary estimate of the number of additional workers required by 
April 1942 in the manufacture of aircraft, vessels, machine toolB, ordnance, and other defense items," May 
20, 1941. 

Work Projects Administration can expect to supply very few of the professional 
and subprofessional workers and very few of those classified as skilled, since few 
workers of the types needed remain on the rolls. Moreover, unless the semiskilled 
workers remaining on Work Projects Administration rolls are retrained or unless 
employers' hiring standards are substantially modified, AVork Projects Adminis- 
tration will probably contribute a relatively small proportion of the semiskilled 
group. It is the unskilled position which Work Projects Administration will most 
commonly fill, and of these there are fewer than 230,000. This is less than one- 
fourth of present Work Projects Administration employment. Moreover, approxi- 
mately 25 percent of these positions have now already been filled. 


The 21 States for which the Bureau of Lnbor Statistics supplies separate esti- 
mates are responsible for 93 percent of total labor requirements, and 10 Spates 
alone will have 68.2 percent of job openings in these defense industries (table II). 
These requirements contrast with the distribution among the States of the total 
labor force and with active registrations at offices of the United Spates Employment 
Service, and even more sharply with Work Projects Administration employment. 
The same 21 States which will require 98 percent of the labor have only 66.4 percent 
of the Work Projects Administration employees (as of August 6, 1941) ; 72.5 per- 
cent of the active registrants (as of May 31, 1941) ; and 71.7 percent of the total 
labor force according to the 1940 census (table II). 

60396— 41— pt. 2( 



Table II. — Additional workers required in defense industries by April 19^2, total 
labor force {ID'fO), active rcpistrations at U. S. Employment Service, and Work 
Projects Administration employment, continental United States, and 21 States 


Continental United 



New Jersey 

Ohio -.-. 

New York 

Michigan — 


Indiana. -.. 


Connecticut - - . 





Virginia - 







Total for 21 

States --. 

Rest of country 

Additional work- 
ers reauired by 
April 1942 ' 

1, 408, 581 

1, 309, 698 

















100. 52, 840, 


Total labor force ' 

.-.-37,869,452 71.7 
7.0 14,971,310 28.3 





53. 3 

U. S. Employ- 
ment Service ae- 
ti ve registra- 
tions ' 

5, 148, 490 

328, 861 
187, 175 
286, 808 
564, 835 
133, 743 
204, 380 
38, 873 
285, 142 
38, 177 
332, 171 
69, 849 
63, 462 
119, 592 
135, 514 
49. 552 
65, 444 

3, 732, 886 

100.0 100.0 



11. 0| 3.3.9 
2.6 36.5 








Work Projects Ad- 
ministration em- 


42. 907 
70, 015 
52, 136 

33, 635 

23. 535 

34, 987 

67, 726 
38, 197 
57, 340 
15, 659 

24, 160 
24, 324 

27, 129 

672, 492 
339, 782 












30. a 


' Bureau of Labor Statistics, "Preliminary estimate of the number of additional workers required by April 
1942 in the manufacture of aircraft, vessels, machine tools, ordnance, and other defense items," May 20, 

2 Census of Population, "Employment status of the population 14 years old and over," 1940. 

* Bureau of Employment Security, Research and Statistics Division, "Preliminary reports of employ- 
ment security operations," June 21, 1941. Data are for May 31, 1941. 

* Aug. 6, 1941 (subject to revision). 


In almost all cases the demand for additional workers is smallest in areas 
where Work Projects Administration employment is greatest. In the 27 States 
(and the District of Columbia), where employment gains for defense industries 
are expecteu to be smallest, only 99,000 workers are estimated to be needed, 
whereas these same States employ 340,000 Work Projects Administration workers. 

The relationship between the geographical distribution of needed defense work- 
ers and that of Work Projects Administration workers is best shown by relating 
both the estimates of additional workers and Work Projects Administration em- 
ployment to the size of the labor force. It appears from table III that the 
intensity of Work Projects Administration employment is lowest where the in- 
tensity of demand for workers is highest. In Maryland, for example, where 
needed workers constitute 9.3 percent of the labor force, Work Projects Adminis- 
tration workers make up only 0.7 percent of the labor force. A similar relation- 
ship prevails in other active defense States, such as Maine, Connecticut, Penn- 
sylvania, New Jersey, Ohio, Michigan, Indiana, Virginia, and Washington. 
Conversely, the intensity of Work Projects Administration employment is rela- 
tively high in Illinois, Massachusetts, Texas, Tennessee, and Oklahoma — States 
where defense labor needs are estimated to be small relative to their labor force. 
In a few States — Missouri, Kansas, Alabama, and Nebraska — the intensity of 
Work Projects Administration employment is above average, while defense labor 
needs are also greater than average. In these States defense activity is highly 
concentrated in a few localities, whereas Work Projects Administration employ- 
ment remains relatively high in those parts of the States which are little affected. 



Table III. — Additional workers required iy April 19^2 in defense industries, and 
Work Projects Administration employment as percentages of total labor force, 
continental United States, and by States 

Percentage of labor 


Percentaee of labor 


Total ad- 
bv April 

ment 2 

Total ad- 
by April 

emplf y- 

racnt > 

Continental United States.. 





2 1 






















Total for 21 States-... 
Rest of country 






1 Bureau of Labor Statistics, "Preliminary Estimate of the Number of Additional Workers Required by 
April 1942 in the Manufacture of Aircraft, Vessels, Machine Tools, Ordnance, and Other Defense Items," 
May 20. 1941. 

* Aug. 6, 1941 (subject to revision). 


The 21 States which the Bureau of Labor Statistics estimates will need 93 
percent of the added defense workers had received 90.2 percent of the prime 
defense contracts awarded through June 30, 1941 (table IV). The concentration 
of labor demand is slightly greater than the concentration of defense contracts. 

Table IV. — Additional workers required in defense industries by April 19.'f2 
and prime defense contracts awarded through June 30, 19.'fl, continental 
United States, and by States 


Additional workers re- 
quired by April 1942 • 

Total defense contracts > 





Continental United States . . 

1, 408, 581 


$12, 180, 450, 000 


California . . 

142, 300 
140, 300 
121, 562 
105, 434 
99, 796 
91, 840 
71, 539 
56, 162 
45, 600 
42, 150 
28, 824 
24, 466 


1, 335, 186, 000 
744, 081, 000 

1, 424, 915, 000 
536, 949, 000 

1, 159, 670, 000 
791, 090, 000 
366, 018, 000 
389, 894, 000 
372, 570, 000 
595, 896, 000 
363, 746, 000 
433, 376, 000 
715, 636, 000 
433, 577, 000 
95, 203, 000 
81, 135. 000 
14, 409, 000 
176, 169, 000 




New Jersey 

n. 7 



New York 








Missouri . . . 




Illinois .. - 



Massachusetts ... .. . . . 



3 6 

Virginia-.. .... .... 




Alabama ... 


Tennessee .. 


Maine . .... 


Nebraska .... 


Oklahoma . _ .. 


Total for 21 States 

1, 309, 698 
98, 883 


10, 984, 625, 000 
1, 195, 825, 000 


Rest of country 


1 Bureau of Labor Statistics, "Preliminary estimate of the number of additional workers required by 
April 1942 in the manufacture of aircraft, vessels, machine tools, ordnance, and other defense items," May 
20, 1941. 

' Office of Production Management, Bureau of Research and Statistics, "State distribution of defense 
•ontract awards, June 1, 1940, to June 30, 1941," July 11, 1941. 



On a State-by-State basis there is a great deal of similarity between the pro- 
portion of contracts allocated to particular States and the proportion of labor 
required in defense industries, suggesting that the contract data present a reason- 
ably accurate indicator of anticipated defense labor needs. California, which will 
require 10.1 percent of all new workers, has 11 percent of all defense contracts 
e warded. Pennsylvania and New Jersey, which together have 17.8 percent of the 
defense contracts, have 18.6 percent of the job openings. Conversely, in the States 
where few workers are required, few contracts have been, awarded. For ex- 
ample, in Maine, where 1.3 percent of the total number of job openings were 
located, 1.5 percent of the defense contracts had been awarded. 

Table V. — Prime defense contracts and facilities, 1940 population, defense cwi- 
tracts and facilities per capita, and Work Projects Administration employment 
bij Work Projects Administration regions and States 

Work Projects Administration 
region and State 

Prime defense con- 
tracts and facili- 
ties cumulated 
from June 1,1940, 
through July 31, 
1941 1 

Populetion 1940 ' ' 

Prime de- 
fense con- 
tracts and 
per capita 

Employment on 
projects financed 
with Work Proj- 
ects Administra- 
tion funds ' 

Amount (000 


Number of 


Number of 


Continental United States 








Region I. 





219. 30 




192, 518 
811, 265 
24, 523 
84, 839 




1, 709, 242 
847, 226 

491, 524 
359, 231 



427. 84 
187, 94 

118. 93 


3. ,587 
36, 860 


Maine . .- -- 




New Hampshire 





Region II .- 

4, 632, 312 


30, 290, 327 


152. 93 

193, 800 


Delaware - 

25. 657 


593, 473 

1, 555. 305 


981, 831 




266, 505 
663, 091 
4, 160, 165 
9, 900, 180 







325. 86 
107. 88 








District of Columbia. 


New Jersey 


New York - 



Region III 

1, 426, 925 


18, 931, 805 



150, 422 



177, 596 
147, 154 

60, 668 

87, 048 
183, 327 
656, 532 


3, 123, 723 
2, 845, 627 
3, 571, 623 
1. 899, 804 
2, 677, 773 



45. 82 
245. 18 

20, 363 
23, 199 
25, 349 
23, 524 
20, 666 
25, 081 
12. 240 




Kentucky _. .. - 



South Carolina _ 




Virginia . . . . 


Region IV . . .-. 

3, 893, 441 


29, 175, 393 


133. 45 

236, 233 


Illinois - 

553, 189 
1, 252, 844 
622, 376 
924, 739 


7, 897, 241 
3, 427, 796 
5, 256. 106 
3, 784, 6G4 
6, 907, 612 


155. 02 
238. 36 
138. 02 
133. 87 


67, 143 
23, 099 
33, 687 
37, 330 
52. 493 
22, 481 


Indiana .. .. 





Ohio - . 


West Virginia 


Region V 

835, 781 


12, 869, 913 



104. 716 


Iowa . . 

1 16, 704 

279, 838 

88, 661 

184, 431 



2, 538, 268 
2, 792, 300 
1, 315, 834 
642. 961 
3. 137, 587 


155. 38 

140. 16 

15, 405 
15, 386 
27, 373 
15, 167 
23, 166 







South Dakota.. 

165. 752 




Wisconsin . 


Region VI ._ _ 

1, 455, 752 


18, 081, 282 



173, 840 


Alabama . 

290, 774 
43. 884 
108, 200 
215, 798 
669, 426 


% 832, 961 
2, 363, 880 
2, 183, 790 
2, 336, 434 
6, 414, 824 


102. 64 
22. 51 

104. 36 

24. 775 
22, 199 
20, 834 
20, 380 
57, 576 




Louisiana . . . 








See footnotes at end of table. 



TABr.E V. — Prime defense contracts and facilities, lOJ/O population, defense con- 
tracts and facilities per capita, and Work Projects Administration employment 
hy Work Projects Administration regions and States — Continued 

Work Projects Administration 
region and State 

Prime defense con- 
tracts and facili- 
ties cumulated 
from June 1,1940. 
through July 31, 



Prime de- 
fense con- 
tracts and 
per capita 

Employment on 
projects financed 
with Work Proj- 
ects Administra- 
tion funds 

Amount (000 


Number of 


Number of 


Region VII 



13, 883, 265 


$214. 57 

103, 396 


17, 206 

2, 080, 208 

145, 425 





58, 677 


618, 400 










499, 261 

6, 907, 387 

1, 123, 296 

524, 873 

559, 456 




550, 310 

1, 736, 191 

250, 742 



301. 16 

129. 46 







356. 18 



43, 034 








11, 170 





Idaho . 




Nevada . . 











1 OfRce of Production Management, Bureau of Research and Statistics: "State distribution of defense 
contract awards, June 1940 through July 1941"; release of Aug. 22, 1941. Includes prime defense contracts 
and facilities awarded by the War and Navy Departments of $50, COO and over. This tabulation should not 
be compared with previous tabulations which do not include Defense Plant Corporation commitment!!, 
defense aid contracts, and a revision of the construction figures in order to reflect the present estimate of the 
final cost of each construction project for which a contract has been awarded or a letter of intent or project 
order issued. The latter (referred to as "facilities") are all included in the above tabulation. As in previous 
tables, the above tabulation excludes manufacturing project orders to Army and Navy Establishments 
(totaling $2, 684, 000, 000), and defense housing and other awards not made by the War and Navy Depart- 
ments. The latter total $1,546, 000, 000. 

* Department of Commerce, Bureau of the Census. 

» Work Projects Administration, Division of Statistics; release of Sept. 2, 1941; showing the number of 
persons employed on Work Projects Administration projects, by State, on Aug. 27, 1941 (subject to 

* Less than 0.05 percent. 

INGTON, D. 0. 

Mr. Sparkman. Your statement in full, Mr. Bums, has been incor- 
porated in our record. We appreciate the great care you have shown 
in its preparation and we feel certain it will be a decided contribution 
to our hearings. I want to ask you some questions based upon that 

First, what is the W. P. A.'s estimate of the number of workers who 
are likely to lose their jobs within the next year as a result of the 
defense program? 

Mr, Burns. The W. P. A. has made no detailed estimate of that, 
although I believe between 2,000,000 and 3,000,000 is a rather reason- 
able figure. 

Mr. Sparkman. Between 2,000,000 and 3,000,000 thrown out by 
defense dislocation? 

Mr. Burns. That is right. 

Mr. Sparkman. Will that be the result of closing down small plants 
through inability to get materials? 

Mr. Burns. The general shortage of materials and the elimination 
of certain types of activities, such as construction. 


Mr, Sparkman. Your estimate will include workers who would be 
affected by S. P. A. B.'s new construction order? 

Mr, Burns. That is rif^ht. 

Mr. Sparkman. Does it include service workers? 

Mr. Burns. Yes ; I should think that figure would include all dis- 


Mr. Sparkman. Have you any information as to the areas that 
are likely to be affected by unemployment due to defense dislocation? 

Mr. Burns. The evidence so far indicates that the States most likely 
to be affected are Wisconsin, Ohio, Indiana, Michigan, and Pennsyl- 
vania. Those are, I believe, tlie ones most affected right now. At 
least, our reports indicate that those areas have suffered some displace- 
ments already, with considerably more in prospect. However, dis- 
placements will be much more widespread than that. 

Mr. Sparkman. Why are those particular areas the ones most 
affected ? 

Mr. Burns. Immediately because there is a fairly large number of 
durable consumers goods produced in those areas. Those industries 
feel the shortages of materials very quickly. 

Mr. Sparkman. Of course, the effect will be felt to some extent 

Mr. Burns. Yes; it will. 

Mr. Sparkman. Or at least in widely scattered areas. 

Mr. Burns. And S. P. A. B.'s ruling on building construction will 
probably make the effects very widely felt because home building is 
the most widely scattered industry in the country, and indications 
are already present that the industry is curtailing somewhat outside 
the defense areas. 

Mr. Sparkman. Now, the areas that are taking on additional 
workers are restricted geographically. Is it your view then that we 
may expect this wave of unemployment to bring about a rather large- 
scale migration ? 

Mr. Burns. I think there is a good chance of that, because as the 
workers are displaced in other areas through the shortages in ma- 
terials, they are more likely to move into these areas where they 
hear about good jobs. So I think the closing down or restriction 
of nondefense industries is certainly likely to set the stage for a 
considerable migration of workers. 

Mr. Sparkman. Is it your impression that much of this migration 
will be a blind migration — that is, that the people will simply start 
out for places where they hear that there is work or where they 
have a hunch that there may be ? 

Mr. Burns. That is the way most migration starts. I don't think 
there has been any considerable amount of directed migration. Usu- 
ally the migrant has heard about a job. I believe your committee 
has shown that people get telegrams or hear from their relatives or 
friends, and they move on the strength of that and nothing more. 

Mr. Sparkman. Very often they find themselves no better off in 
their new locations and often much worse. 

Mr. Burns. I think that in some of the big production centers the 
nondefense industries will supply workers for the defense plants so 
they w^ould not need any migrants coming in, at least for some 
months to come, or perhaps a year. 


Mr. Sparkman. In your statement you refer to an estimate made 
to this committee recently in our Detroit hearings by the Michigan 
Unemployment Compensation Commission, that displacement result- 
ing from curtailed automobile production would be 250,000 by the 
end of January, next year. This decline, it is estimated, will be 
olfset by an increase in defense employment of only 90,000 in Janu- 
ary, leaving a net unemployment there of 160,000. Of course, in 
addition to these there will be a large number of service workers 
thrown out of their jobs. All these workers and their dependents 
will probably number well over a quarter of a million persons. 
And that is only one State we are dealing with. In your paper 
you point to many other areas which will be similarly affected. Now, 
I want to ask you this question: Can any considerable number of 
those displaced workers be absorbed on the W. P. A. rolls? 


Mr. Burns. Not at the present time, and under the present ap- 
propriation to the W. P. A. The W. P. A. rolls are just a little 
in excess of 1,000,000 at the present time, and there are a little 
more than another million who are eligible to get jobs but who can't 
be put on the program ; so that any further additions to this eligible 
group are not likely to get jobs as long as the appropriation is 
limited to the amount at present. 

Mr. Sparkman. You mean that there are something like 2,000,000 
persons certified or eligible for W. P. A., and your appropriation 
will provide for the employment of only about 1,000,000? 

Mr. Burns. That is right. 

Mr. Sparkman, Therefore, newly displaced workers would simply 
be an addition to that number which is already beyond what you 
can take care of. 

Mr. Burns. That is right. Some of them might be given jobs. 
As a matter of fact, a few of them have been given jobs in Wis- 
consin. But that happened to be in a special locality where there 
wasn't much of a waiting list. In most areas there is a substantial 
waiting list, and if any new workers become displaced and eligible, 
they have to take their turn, 

Mr. Sparkman, Where jobs might be available for these displaced 
workers, can they obtain any assistance from the W. P. A. for trans- 
portation ? 

Mr. Burns. That is possible only under these circumstances : If 
they apply and go on the W. P, A., and then are placed on a train- 
ing project, they can be sent to an area to get that training, and 
the transportation will be paid for them. That is being done under 
the present training programs, to a limited extent, 

Mr, Sparkman. That is only for the purpose of getting training? 

Mr. Burns, That is right. 

Mr. Sparkman. And if they are already skilled workers in that 
same line they would not be eligible for the training program? 

Mr. Burns," No, And there would be no basis for paying their 

Mr. Spark?,ian. So we can't see much hope for any help from the 
W. P. A. for transporting these workers who are displaced ; because 
almost all of those men are skilled workers already ? 


Mr. Burns. Not necessarily. You speak of the substantial number 
of service workers and construction workers. Now, they might be able 
to get jobs in mechanical trades which would require some training. 
If they happen to live in an area where there are no defense jobs, they 
could be certified at that point on a training project and sent to the 
area where there were defense jobs and vocational-school facilities and 
be given training at that point, and their transportation would be 

Mr. Sparkman. According to your figures, we face a very large 
amount of unemployment due to defense dislocation. I certainly 
agree with the statement that you make in your paper that the Fed- 
eral Government has a responsibility for the disemployment of these 
people. Even where they can be reemployed on other defense jobs, 
there will necessarily be a period of unemployment. If they have sav- 
ings, they will be ineligible for your program. Do you know whether 
any part of the defense establishment is discussing ways and means of 
providing employment for these people, or some other type of assist- 
ance without requiring certification by local relief authorities? 

Mr. Burns. I don't know of any such plan in the defense agencies. 
We believe, however, that it would be desirable to prevent this particu- 
lar group of workers from applying for relief before getting employ- 
ment. As it stands under the present appropriation act, we must 
take only people who are certified. That is w4iy, in my paper, I sug- 
gested that if these people are given work, it would be preferable for 
them to be referred directly by a public employment office to the proj- 
ects where they are rather than through the relief process. 

Mr. Sparkman. The committee is interested in the possible reem- 
ployment of these workers on defense jobs. You mentioned the fact 
that there is a possibility of a training program and that the numb-^.r 
of these people thrown out of work by the defense dislocation — serv- 
ice workers, related workers, and the like — might profit from that 
training program. To what extent is the W. P. A. able with its 
present funds to assist these workers during the training period? 

training projects 

Mr. Burns. The W. P. A. at the present time has about 35,000 people 
on training projects. With the present money, it could increase that 
possibly up to 100,000 or a little better. Any substantial increase over 
and above that probably would require additional money. 

Mr. Sparkman. Do you pay these people who are taking the train- 
ing program the same wages you pay regular W. P. A. workers? 

Mr. Burns. Yes; the workers who are selected for the training 
program are already on W. P. A. jobs, and they are transferred to the 
training project at the rate they were getting before the transfer. 
If they are new workers coming into the program, they are assigned 
the unskilled rate for the training period. 

Mr. Sparkman. What changes in the present administrative pro- 
cedures would be needed to refer to project employment workers who 
are displaced bv defense dislocations? 

Mr. Burns. There would be no administrative problems so far as 
W. P. A. is concerned. They would merely be asked to accept referrals 
of those workers by the public employment office instead of through 
the local relief office. It would be a very simple matter there; the 


only major change necessary is a legislative one which would permit 
the referral of workers to our program by a public employment office. 

Mr. Sparkman. Is there a shortage of materials used by W. P. A. 
projects, or are they likely to encounter serious difficulties under 
S. P. A. B.'s materials ruling? 

Mr. Burns. There hasn't been much difficulty at the present time, 
partly because most of the W. P. A. construction projects use materials 
that aren't affected by the S. P. A. B. ruling. There has been a shift 
in the type of project, away from buildings that use these scarce mate- 
rials, so there is no likelihood that these projects will be affected by the 
S. P. A. B. ruling in the future. As I pointed out in my paper, it will 
be possible to increase the number of projects without running into 
that difficulty because the basic construction materials are not scarce. 
It is only the metals that are scarce, and our projects don't use a great 
quantity of metals. 

Mr. Sparkman. Would you tell us something about the various types 
of training program now under operation in the W. P. A. ? 

Mr. Burns. There are two basic types. One is very small. That is 
the in-plant training. There are just a few hundred workers, I be- 
lieve, receiving that kind of training at the present time. The bulk of 
the workers receive training in the vocational-school facilities. Those 
people are certified by our organization to the schools and are given 
training there. The types of workers correspond to the general speci- 
fications of employers. They are given training in the kinds of skills 
that employers are demanding in the locality. 

Mr. Sparkman. Can both of these types be adapted to help do the 
job of shifting workers from nondefense to defense jobs? 

Mr. Burns. They can. They have already. A fairly substantial 
number of workers have been shifted into defense work. As a matter 
of fact the training program is limited to training workers for defense 
jobs at the present time. Those workers displaced in nondefense in- 
dustries will have to go on relief and then be referred to our program 
before they can get that training, and the point that I made in my 
paper was that if they could be referred directly to a training pro- 
gram without going through the relief process it would be much better 
for the people themselves. 

Mr. Sparkman. What steps do you believe could be taken to assist 
those displaced workers above the age limits in defense industries and 
below the age limits for pension benefits? 

Mr. Burns. I don't think a great deal can be done as long as indus- 
try maintains its present hiring standards. They can be given project 
employment ; they can be given some training which would fit them for 
work if employers wanted them ; but the real difficulty is that industry 
has held to those hiring standards, and anything of importance to be 
done for these older workers must be done by breaking down the bar- 
riers which industry places against them. 

Mr. Sparkman. Isn't it true that, since the inception of the defense 
program, the average age of the W. P. A. workers has gone upwards 
considerably ? 


Mr. Burns. It has gone up. Early in 1939 the average age of 
W. P. A. workers was approximately 39 years. And at the present 
time it is almost 43 years. If we look at the figures in detail we notice 


that tlie percentage of workers in the 20 to 25 or 20 to 30 age group 
is much less, and the percentage in the 40 to 50 age group is consider- 
ably higher now than 2 years ago. 

The Chairman. Mr. Burns, in your statement you say there are 
1,040,000 on the W. P. A. rolls in the country today. 

Mr. Burns. Approximately that ; yes. 

The Chairman. And there are about 2,000,000 eligible to go on ? 

Mr. Bukns. Altogether there are about 2,200,000— almost 1,200,000 
above our employment at present. 

The Chairman. At hearings recently held by this committee some 
witnesses testified there are about 5,000,000 unemployed employables 
registered in the State and Federal employment agencies in this 
country.' Is it possible that any of those WPA workers you have 
mentioned are registered with those agencies ? 

Mr. Burns. Yes ; they are supposed to be registered with the public 
employment offices. I believe about five million people altogether are 
registered now. Of that number there ought to be 1,000,000 W. P. A. 

Mr. Sparkman. Is it possible that a good number of those may have 
obtained employment without notifying the office? 

Mr. Burns. It is possible. I believe however, the employment 
office gets a record from the employers, stating that these people 
have been given jobs. 

Mr. Sparkman. If they are referred by the employment office that 
is true, but if they are employed without having been referred by 
that office, they don't necessarily get it by name. 

Mr. Burns. Not necessarily. Sometimes they do, but if they don't 
their practice is, I believe, to drop the name after three months. 

Mr. Sparkman. They require reregistration every three months? 

Mr. Burns. Something like that ; and if they don't reregister, they 
are automatically dropped out of the files. 

Mr. Sparkman. Does a person ever register who is actually 

Mr. Burns. Yes. 

Mr. Sparkman. Then a great many may be holding jobs? 

Mr. Burns. Not a very large number. I think the Employment 
Service estimates that about 5 percent are employed and looking 
for better jobs. The great bulk are not employed and are looking 
for work. 

Mr. Sparkman. You think, then, that by their frequent registration 
and close check on them, that figure of 5,000,000 should be fairly 
accurate, or fairly up to date? 

Mr. Burns. It should be fairly up to date. How accurate it is, I 
don't know. A few years ago the number of people registered at 
the public employment offices was much less than the total number 
of unemployed. I should guess that there would be a larger per 
centage of the unemployed registered now than 5 or 6 years ago, 
because the program is older and people are more familiar with 
the public employment offices, and the offices have a better coverage. 
So it might be now that the public employment office figure is a 
fairly good measure of unemployment, or at least a better measure 
than it was a number of years back. 

"^ See teBtimony of Arthur J. Altmeyer, Washington hearings, part 17, p. 6782. 


Mr. Sparkman. I have heard of persons registering at more than 
one employment office. Do the employment offices always clear with 
one another on such registrations? 

Mr. Burns. I don't know. 

Mr. Sparkman. I wonder how many of these might be duplicate 

Mr. Burns. Probably not a great many among the bulk ot the 
people, because they would be likely to register at the offices nearest 
their places of residence. 

The Chairman. Where can we get the answer to that question ? 

Mr. Burns. The Bureau of Employment Security.^ 

duplicate registrations 

Mr. Sparkman. In my section when a defense project draws help 
from half a dozen counties around it, a person resident in one of the 
other counties might register in his own employment office, but 
comes to the county where the project is physically located and regis- 
ters also, feeling that those people will get a prior call. I have known 
them to go down to counties 50 or 75 miles away and do the same 
thing there. I don't know to what extent those duplicate registra- 
tions have been carried on. But it would be interesting to know. _ 

Mr. Burns. I could get a detailed statement on that for insertion 
in the record. 

The Chairman. I would be glad to have you do so, Mr. Burns.^ 

Now, with winter coming on, and with over 1,000,000 eligible 
W. P. A. workers, what is going to become of those people? Have 
you any suggestion how to help them ? 

Mr. JBuRNs. Some of them, of course, will get other jobs. The dis- 
placement of 1,000,000 workers doesn't mean an increase in unemploy- 
ment by that amount. Some of them will get jobs in defense indus- 
tries. Some w^ill get temporary jobs in retail trade during the Christ- 
mas season. Some of them will have unemployment-insurance bene- 
fits. A large number will undoubtedly apply for relief, and add to 
the eligible but not employed group on W. P. A. 

The Chairman. Those figures on displacement approximate figures 
that the committee has received on defense migration. There are 
2,000,000 to 3,000,000 people who have left their home States and gone 
to defense centers in other States. The residence requirements of 
these States of destination range all the way from 1 to 5 years. If 
this war emergency ends, the migrants will have lost their residence in 
their home States and will not have gained that status in the State 
of destination. What can be done for those people? They can't 
go on relief. 

Mr. Burns. A numl^er of possibilities are open. One is that the 
W. P. A. may certify those workers directly without taking the cer- 
tification of the local relief agency. That has been done in the past, 
and it would then make it possible for those nonresident people to get 
public employment. Tliat is one way out of the difficulty. 

The Chairiian. To get public employment if public employment 

1 See Exhibit A, p. 8114. 


Mr. Btjrns. If it doesn't exist, those people will simply be out of 
luck. They can't get local relief. They can't get project employ- 
ment. They will simply live off their relatives and neighbors, or in 
any other way they can. 

The Chairman. The thing that has impressed me all through these 
hearings — we have been holding them for a year and a half now — is 
the aimlessness, the blind travels, of these people. They don't know 
where to go. They hear a rumor or someone sends them a letter or 
telegram. Do you know anything that the Federal Government is 
doing today to give active information to the people of the various 
States of the Union, as to where there is work and where there is not 


Mr. Burns. The public employment offices are attempting to make 
the labor market a better organized market. They are attempting to 
dissuade workers from moving into areas where there is a surplus of 
labor. They are trying to direct workers to areas where there is a 
shortage of labor. They have done a considerable amount of that 
work during the defense period. However, a large number of the 
workers moving about the country probably are moving on the 
strength of just such information as you describe. The public em- 
ployment offices have not educated the workers as a whole to accept 
their advice, and only their advice, as to where jobs happen to be 

The Chairman. Have you ever seen an article in a newspaper advis- 
ing the people before they moved out of the State to go and get infor- 
mation at the employment office? 

Mr. Burns. I haven't heard that they did that, and I believe most 
of them don't. 

Mr. Curtis. May I interpose right here : Two of the daily papers at 
Lincoln, Nebr., featured full-page advertisements suggesting to people 
that they not just pull up and leave — get in a car and try to find high 
defense wages — and impressed upon them the importance of the ac- 
curacy of their information, and urged them not to desert what they 
had in quest of that pot of gold. About 2 weeks ago in some news- 
paper convention in Chicago these papers were awarded the first place 
for having the finest community advertisement in America. 

The Chairman. That is in your own State ? 

Mr. Curtis. Yes. 

The Chairman. Who paid for the advertisement ? 

Mr. Curtis. The chamber of commerce, I think. 

The Chairman. Don't you think the Federal Government should 
get into that? 

w. p. A. training in relief category 

Mr. Curtis. I don't know. There are a lot of these people traveling 
around who can't even read. [To Mr. Burns:] You are economic 
adviser to the W. P. A. I want you to give me some advice this morn- 
ing. I have a letter on my desk from a father of three children, and 
he has done farm work for the last 5 or 6 years. He was a farm hand 
and made $35 a month and supported a family of five. He stayed off 
relief and off W. P. A. He has an opportunity now to enroll in a sheet- 
metal school and take that course and equip himself for some better 


type of work. Two other individuals who have never accepted farm 
work, and who have been on relief, can support th-eir families while they 
go to school from funds of the W. P. A. educational program, and here 
is an individual who would make a fine employee in the defense pro- 
gram. He has rendered a service to the Federal and State Governments 
m the past year by staying off relief, and they say to him : "We can't 
help you go to this school unless you go down to the W. P. A. office and 
get certified." Has that problem been up before you ? 

Mr. Burns. In more or less those terms ; yes ; it has. But there isn't 
really anything, or not very much, that the W. P. A. can do about it, 
because the law requires that people who get on the W. P. A. must be 
certified as in need. The only way to get around that particular kind 
of difficulty is to permit on the training program anybody who needs 
training aiid who has fair prospects of a job and to pay wages for the 
month or 2 months required for the training. That would give us the 
utmost mobility in our training work. 

Mr. Curtis. Canada and England have that, haven't they ? 

Mr. Burns. I believe so. But as long as we limit the training to 
people who are on relief, and exclude those people who have managed 
to stay off and who might have a job, such as the man you mention, that 
program would be closed unless they took the other way out and ap- 
plied for relief in order to get the training. 

Mr. Curtis. I personally handled this case, and I took it up with 
several officials here because it strikes me that an individual who was 
willing to sacrifice and support a family of five on $35 a month and do 
a type of work that many people scorn because of its long hours and 
poor pay should not be penalized by the lack of opportunity to get 
some of this training. 

Mr. Burns. I agree with you completely, a. id I think it would be 
most desirable to take the training part of this program out of the 
relief category so that the opportunities to get training would be open 
to more people. 

Mr. Curtis. I didn't recommend to this individual that he seek cer- 
tification on W. P. A., because I think it would hurt him and his chil- 
dren the rest of his life in his chances of getting jobs and going on and 
being self-sustaining. But that is the only avenue open to him. 

Mr. Burns. As things stand now, that is true. 

Mr. Curtis. Chairman Tolan made reference to a public-works pro- 
gram. They can't build anything, can they? Hasn't S. P. A. B. 
stopped all public construction ? 

Mr. Burns. No. Only that kind of construction which uses stra- 
tegic materials and which is not of a defense character or necessary for 
public safety and health. 

Mr. Curtis. Can you mention any construction that doesn't use stra- 
tegic materials ? 

construction not requiring strategic materials 

Mr. Burns. Yes. The building of roads doesn't require brass, cop- 
per, aluminum, steel, and other scarce materials. The basic building 
materials such as lumber, gravel, sand, cement, brick, stone — those ma- 
terials are quite plentiful except in a few isolated cases — and road 
work, recreational facilities, streets, and curbs, use those kinds of ma- 
terials and not the strategic metals. That is why I pointed out in my 


Statement that the character of the construction program of the 
W. P. A. at the present time is such that it does not compete with de- 
fense work and its expansion would be possible without getting banged 
up by the S. P. A. B. ruling. 

Mr. Curtis. Is there a shortage of skilled laborers to carry on those 

Mr. Burns. There is in some cases, although at the present time there 
are about 150,000 on the program who are in the skilled category. The 
kind of work that I have in mind — road work especially — doesn't re- 
quire the high degree of skill that building construction requires, so 
that the question of shortages in skilled labor doesn't really arise in this 

Mr. Curtis. There definitely would be a shortage of the heavy equip- 
ment needed, wouldn't there ? 

Mr. Burns. There is likely to be a shortage of heavy equipment. 

Mr. Curtis. There is going to be heavy pressure for the construction 
of roads urgently needed for defense. 

Mr. Burns. That is right, and our program is building a large num- 
ber of those so-called access roads at the present time. That is prob- 
ably the largest single type of road job that the W. P. A. is doing, and 
much of it doesn't require heavy equipment. A good road can be put 
in with a lot of men doing most of the work and a minimum amount of 
equipment, so that the shortage of equipment that is likely to develop in 
the future probably would not be a serious factor either. 

Mr. Curtis. But any public works that deals with water control, 
flood control, storage dams, and the like is hurt by the S. P. A. B. 
ruling, is it not ? 

Mr. Burns. Heavy construction work, if it isn't for defense pur- 
poses, will be affected seriously by the S. P. A. B. ruling. 

Mr. Curtis. But the type that will not is that which requires mostly 
hand labor. 

Mr. Burns. That is right. And also a minimun of metal. 


The Chairman. What about workers on relief projects who go into 
nondefense industry and then are unemployed when the jplants shut 
down ? Can they be recertified ? 

Mr. Burns. The law stipulates that if they leave the project to take 
private employment and then lose that employment through no fault 
of their own, they are to be given their jobs back again. That right 
now might be the source of considerable difficulty for the W. P. A., 
because it is employing now the highest average number that is pos- 
sible throughout the year. If there is any substantial number of 
people coming back, leaving private employment, we are legally 
obliged to give them work, and I think that requirement might cause 
some difficulty for the W. P. A. 

The Chairman. Would you have to let out the ones you had hired ? 

Mr. Burns. Yes; and some workers who have been employed for 
some time in nondefense industries for that reason will not have much 
chance of getting W. P. A. employment as things stand now, because 
people who left to get farm labor a few months ago have the right to 
get the first jobs that open up under the law. 


The Chairman, Thank you very much for appearing before us, Mr. 

The committee will take a 5-minute recess. 


The Chairman. The committee will please come to order. Mr. 
Brown is our next witness. 

Mr. Brown. Here, sir. 

The Chairman. Will you take a seat there, Mr. Brown ? Mr. Brown, 
this is the second day of our Washington hearings on the dislocations 
of industry and the labor market arising from defense activities aa 
they are related to the problem of migration. Last month we held 
hearings in Detroit and learned that approximately 200,000 automobile 
workers would be faced with unemployment, at least temporarily, and 
that the situation that existed at that time warranted an estimate that 
there would still be as many as 100,000 workers not reemployed by 
next summer. 

Since coming back to Washington we have heard of similar situa- 
tions throughout the country, situations in which a great deal of unem- 
ployment is expected to result because of metal shortages and the 
allocation program. 

Yesterday Mr. Donald M. Nelson, of S. P. A. B., and a panel of in- 
dustrial engineers testified for us on the possibility and problems of 
putting all the Nation's manpower to work on defense orders, and the 
consequent curtailment of civilian projects and services. 

We have asked you here today to supply us with information on the 
industries and communities which are being affected by curtailment of 
normal civilian production, and particularly to tell us what is being 
done for these people. As I understand it, you are chairman of that 
branch of Mr. Hillman's Labor Division of O. P. M. which is con- 
cerned with this problem of unemployment and labor displacement 
resulting from defense dislocation. 

We have submitted to you an outline of material which we need in 
our consideration of this problem. The committee received from you 
yesterday a letter in which you state that in the press of work you had 
no time to prepare a statement. You add that you intend later to 
provide additional material if we care to have you submit it. We'll 
grant you that privilege. Our record wdll stand open until November 
10 to receive this material.^ Instead of asking you to make an extempo- 
raneous statement, I will ask Congressman Curtis to put to you certain 
questions he would like to ask. We have had a good deal of conflicting 
testimony on priorities and allocations, and would like further infor- 
mation on that. 

Mr. Curtis. Mr. Brown, would you please tell us what are the more 
important industries which have already been or may be threatened 
with curtailment in the very near future, approximately how many 
people these industries now employ, and approximately how many of 
those people will be unemployed in the near future ? 

1 Mr. Brown's prepared material, received subsequent to the hearing, appears on pp. 8150 
to 8153. 



Mr. Brown. I might explain, first, that we can give figures as to the 
men employed normally in the industry, but in the measurement of 
priorities unemployment there are several statistical difficulties. We 
ourselves would be as much interested in an exact measurement as 

Let us take first the question as to whether one takes a gross displace- 
ment figure or a net figure of unemployment. The information that 
really helps in the formation of policies is the net figure. In the city 
of Los Angeles, for example, if there are certain people displaced, and 
at the very same time tremendous increases in the aircraft industry, 
from the point of view of social impact that is very different from a 
condition such as that of the one-industry town in the Midwest where 
there is no defense pick-up. In our own studies, therefore, we have 
found it necessary to particularize, to take community by community 
and measure the impact in that single labor market, and then to decide 
in our certification proceedings — which I'd like to explain if you care 
to have me do so — whether a community is adversely affected to the 
extent that it ought to come under the certification program. 

To offer examples: Men laid off in the jewelry industry in the Con- 
necticut Valley would quickly be reemployed, whereas in the washing 
machine industry in Newton, Iowa, there might be a different condi- 
tion, because the plants there are not getting defense contracts, and 
it might be that unemployment would last several months, or might 
continue indefinitely or until the worker moves to some other locality. 

In answer to your question I have here the figures on the normal 
number of employees in such industries as jewelry, stoves, aluminum 
manufacturers, agricultural implements, refrigerators, domestic wash- 
ing machines, furniture, radios, business machines, rubber tires, rubber 
goods, and sewing machines — all selected as likely to be affected.^ 
But, as you can see, there is a vast degree of difference of impact right 
in those industries, as between, say, stoves on the one hand, and radio 
equipment on the other. So, as I say, it is very difficult to make an 
exact measurement of priorities unemployment. 


Mr. Curtis. About how many industries would be affected ? 

Mr. Brown. I would say, since the shortages are now reaching not 
merely the highly specialized types of material, like magnesium, but 
are reaching such fundamental materials as steel, cast iron, and copper, 
that practically every industry using metal will be affected to some 
degree. And it is a question of what the net effect will be, with defense 
employment picking up where nondefense leaves off. 

Mr. Curtis. What will be the gross unemployment due to enforce- 
ment of priorities in all industries, say, for 1941? Beyond that we 
don't know where we go in priorities. 

Mr. Brown. I have seen these estimates, and in our own work we 
would be as much responsible for the development of them as anyone. 
But frankly, after putting in a great deal of thought, we have not felt 
it either possible or, for that matter, desirable in a development of 
public policy, to venture a definite figure. I think it would lead to 
confusion rather than to assistance in the development of public policy. 

'The figures referred to appear in Mr. Brown's prepared statement. See p. 8151. 


May I mention two or three difficulties? One is the question of 
totalizing community lay-offs— that is. as among communities. A 
doctor does not average up the degrees of fever among the patients in 
a given ward. The impact of unemployment of a hundred men in a 
small community is very different from' the impact of unemployment 
of 5,000 men in a large' community. Furthermore, situations change 
very rapidly. In a given community such as one of the Midwest cities 
getting defense contracts at this time, the impact may be weighted by 
2 or 3 months, so that unemployment insurance may help to carry those 
people, and there is a very definite prospect of reemployment. 

Mr. Curtis. Who said 2,000,000 men would be displaced? 

Mr. Brown. I think Mr. Leon Henderson made that statement in a 
newspaper interview. 

Mr, Curtis. How did he arrive at that figure ? 

Mr. Brown. I assume that was a matter of personal judgment, 

Mr. Curtis. How does that compare with your estimate ? 

Mr. Brow^n. It seems a very large overestimate. 

Mr. Curtis. What did that estimate include? Merely the people 
engaged in making things? 

Mr. Brown. That may have been what Mr. Henderson had in mind. 
If so, he was thinking of total displacement — that is, of the total num- 
ber of persons who might leave their jobs, without taking into account 
the fact that many of them found other jobs. 

Mr. Curtis. He was speaking of factory workers, was he not? 

Mr. Brown. Yes; those employed in industries using metals and 
similar materials for fabrication. 

displacement among distributors 

Mr. Curtis. Is there any estimate of the displacement of people in 
the distribution of things? 

Mr. Brown. I don't know, because the distribution trades have not 
been nearly as hard hit. The group that has been hit in the distribu- 
tion field are the salesman for manufacturing companies or the job- 
bers. In the retail trades there is a diversity of products sold, as in 
the large retail stores; and as some products become scarcer others 
will fill in. But the specialized salesmen are certainly apt to be af- 
fected, because now those companies are selling to the Government 
and don't need their sales forces, 

Mr. Curtis. The average garage sells cars, refrigerators, radios, and 
washing machines ; and there are as many people engaged in distribut- 
ing cars as making them. 

^Ir. Brown. I would say the salesmen of automobiles will be affected. 

Mr. Curtis. Your answer is that nobody knows how many of these 
people will be displaced ? 

Mr. Brown. I would say more than that. There is a vastly increas- 
ing knowledge. It is our job — the job of the Bureau of Employment 
Security and the Bureau of Labor Statistics and various other 
agencies — ^to make available knowledge on conditions in specific plants 
and in specific areas. Priority unemployment hits different plants in 
the same town and different towns at widely different times. It isn't 
like depression unemployment. I have been a student over the years of 
employment security. In studies in the Social Security Committee 
of the Social Science Research Council, we were dealing with depres- 

60396 — il— pt. 20 9 


sion unemployment where all of industry was affected at the same 
time by the same vast economic change. Priority unemployment, 
however, has various technical aspects. The aluminum-goods manu- 
facturing industry was hit ^.ast summer; then came copper, with a 
slower timing and less severity; then steel, in which the relative short- 
age is not nearly as acute even yet as that in copper. According to 
the uses a company makes of these different materials, so is it affected 


Another factor is the tremendous increase in demand for arma- 
ments. That demand affects a company and its community according 
to the initiative or adaptability of that i^articular firm to defense 
production. It is a hit-or-miss phenomenon. That is why it is so 
important to get full knowledge of the individual community, and 
that is what we are driving at as hard as possible. We are economic 
doctors, of a sort, dealing with specific cases ; and the totals therefore 
are not nearly as significant as if the condition were one that could 
be reduced to a universal average. 

Mr. Curtis. In other words, loss of jobs by a great number of people, 
by reason of priorities, in an area that had quite a little defense activity 
would create a lesser problem than in an area that had nothing? 

Mr. Brown. Exactly, sir. Let us consider Los Angeles or Baltimore, 
or the New Jersey, New York, and Philadelphia metropolitan areas. 
Priority unemployment, in which neither specialized skill, nor age, 
nor other isolating factors plays a part, has been absorbed very quickly, 
and a factor in that absorption has been earnings. Men saw the possi- 
bility of good earnings — overtime wages, overtime pay — in the defense 
work. They shifted very rapidly. 

There was a different situation in Manitowoc, Wis, which is 90 miles 
north of Milwaukee, and where it takes a very big decision for a man 
to move his family down to Milwaukee. That is where priority unem- 
ployment really hits. 

Mr. Curtis. Could you tell us approximately how many towns and 
cities would be affected by the curtailment of these industries, in addi- 
tion to Michigan communities about which we learned first-hand ? 

Mv. Brown. I can show how we are getting our information, and I 
can discuss certain communities because we have surveyed them. The 
survey procedure got going early in September. 


We are using the Bureau of Employment Security machinery and 
the United States Employment Service, which are Federal agencies,, 
and 48 State employment services. We have in process 104 community 
surveys and we are adding daily. At the present time we have 
75 back, and we have had 35 communities acted upon by our certifica- 
tion connnittee. 

Eleven community surveys have indicated definitely the need for 
certification for remedial programs recommended by the contract certi- 
fied by us, recommended by Mr. Odium's Division,^ then the Army and 

^ Division of Contract Distribution, Office of Production Management. 


Navy. In all those cases the Army and Navy have acted. We are sure 
of the exact conditions in 75 communities. 

In addition, we are watching closely about 500 additional communi- 
ties. The way we build up our list concerning those communities is 
to make note of all the companies producing any product which is 
subject to a curtailment order, like automobiles, refrigerators, or wash- 
ing machines, and any company using quantities of aluminum, copper, 
etc., and then to keep watching each community or industry in which 
we have a representative in our priorities branch. In those 500 com- 
munities we know that there is likelihood of priority unemployment. 
Many times we know it even before the employer does because we send 
our men out, or the employment service does. The employer naturally 
assumes things will go on. But our job is not to rely on the reactions 
of the individual employer alone, but to keep watching ahead as to the 
effect on that plant and that community. So that there is a shadowy 
zone there embracing those 500 communities which we are now watch- 
ing. It could be expanded, and probably will, as priorities cut deeper, 
maybe to a thousand. But it is a shadowy boundary line. It is very 
hard to give a distinct number. That is the figure that we are oper- 
ating on. 

Mr. Curtis. Do you come in contact with problems like this : Assume 
a certain railroad community has not been very active for some time — 
not nearly as active as it was in the days before trucks and automobiles. 
But some 200 miles away from there, there is booming defense activity. 
Under those circumstances, the railroad workers may be routed out 
of that center. Isn't that true ? 

Mr. Brown, Yes. 


Mr. Curtis. At our Detroit hearings representatives of the Labor 
Division of O. P. M. described in some detail the operation of the 
so-called Buffalo plan. From O. P. M. releases and other numerous 
sources we have heard that the Buffalo plan offers a concrete construc- 
tive means of transferring men from nondefense to defense jobs with 
a minimum loss of time, thus averting unnecessary migration and 
unemployment. We have consequently been interested in examining 
the plan in detail. Following the Detroit hearings, members of our 
field investigating staff were sent to Buffalo, and we have studied what 
materials have been made available to us through your own and other 
O. P. M. offices. 

On the basis of this material there are certain questions we wish to 
put to you. In a report on approximately 3,200 workers laid off by 
General Motors at the end of July, the Labor Division stated in 
our Detroit record that they had, on September 17, specific evidence 
of the reemployment of 1,275 men. Do you have evidence of further 
reemployment ? 

Mr. Brown. That is outside of my immediate jurisdiction, but I 
can obtain the figures for you. That work was carried out under the 
Labor Supply Branch of the Labor Division. The priorities branch 
concerned itself with the policies of curtailment orders, priority or- 
ders, and the certification of communities adversely affected. In the 
matter of operation, of actual transfer of men, the Labor Supply 
Branch, working with the employment service, carries on. I can 
obtain from Commissioner Flemmmg those figures. 


Mr. Curtis. If you will provide them for us, we shall have them 
placed in the record. 

Mr. Brown. Yes, sir. ■ 

Mr. Curtis. Do you not think that any plan which attempts to put 
men back to work should have certain controls, so that the responsible 
organizations would know specifically what the progress of its 
work is? 

Mr. Brown. May I explain to you just what we are doing? I 
think that will indicate to you the reasons for my earlier statement. 
I might say first of all that when I came down here in early May, 
I had the feeling that curtailments would have to be carried further, 
in order to assure sufficient materials for the defense program, and 
that that would involve very considerable lay-offs of people. 

In the beginning, Commissioner Lubin was in charge, and I later 
took his place. We started in having a representative of the Labor 
Division with every priority committee. I sat as a labor consultant 
on the Priorities Board under Mr, Stettinius. Then a change was 
made to industry branches — the present arrangement. A representa- 
tive of the Priorities Branch of the Labor Division sits with every 
industry chief in a consideration of allocations, priorities or other 
orders affecting in any way the displacement of labor. 


It is our policy in our consultations with those industry chiefs, 
first to watch those cases where, by the provision of a limited amount 
of material, a business can be kept in operation if it is moving over 
to defense 

That is No. 1: That the going-concern values in that company be 
preserved, that the men be there— the management, the foremen, 
and so forth — working and on the ground, so that in a move from non- 
defense to defense, that company's status as a going concern is pre- 
served. We urge that materials be provided to the fullest extent 
possible to do that. 

Secondly, we are watching all hardship cases — that is, where the 
cutting off of the material creates a condition of serious hardship 
among the employees of the company or in a community. That is 
another reason why we need to know the condition in communities 
throughout the country. 

As time went on we found that cushioning effects — that is, putting 
the brake or cushion on the shock — were not nearly effective enough, 
and beginning in June we began planning on various means of help- 
ing to put contracts into communities where priorities displacement 
iiad been serious. Mr. Levis ^ and Mr. Mehoi'nay,^ under the direction 
of Mr. Knudsen and Mr. Hillman, with Army and Navy representa- 
tives, started with the secretaries and with others to work out arrange- 
ments whereby communities adversely affected could be given special 
consideration. These efforts were to draw upon the experience of Mr. 
Mehornay, Mr. Nehemkis,^ and others. There were certain proposals 

1 William E. Levis, member of the Planning Board, Production Division of Production 

^ Robert L. Mehornay, chief of defense contracts, Contract Unit, Production Division, 
Office of Production Manasemonl. 

3 Peter R. Nehemkis, special assistant. Contract Unit, Production Division, Office of Pro- 
duction Management. 


for adjustment of procurement procedure to permit more small con- 
tractors previously in other lines of industry to come into defense 


That negotiation went on for some time. We had very fine co- 
operation frorn the armed services, and early in September the direc- 
tive, based on an agreement between 0PM and the Army and Navy, 
was developed. Under that directive, after certification of the find- 
ings on the part of the Priorities Branch, Labor Division, going to 
the Contract Division, there is established first the fact that priority 
unemployment is serious, and second, the type of contract and deter- 
mination of the particular firm in the community that can do the job. 
Then the Army and Navy, through their divisions of contract distri- 
bution — each having such a division — proceed to put contracts into 
those places. 

Mr. CuETis. That is interesting, Mr. Brown ; but this Buffalo plan 
has been held out ae a model, and I want to know more about it. The 
O. P. M. Labor Division at the Buffalo office has to make weekly reports 
to the New York State employment service, does it not? 

Mr. Brown. I suppose that is their j^rocedure, sir. 

Mr. Curtis. Will you see to it that we get copies of those weekly re- 
ports ? 

Mr. Brown. I will be glad to take it up with them, sir.^ 

Dr. Lamb. There are a few questions I'd like to ask to see if we can 
understand the work of the Labor Supply Division and indicate the 
manner in which you cooperate. As I understand it, from what you 
have just stated, the Priorities Division is responsible for determining 
the communities which are going to be affected by curtailments, 
through the presence of representatives of the Labor Division at the 
meetings of the industry branches of O. P. M. 

Mr. Brown. That is right. 

Dr. Lamb. So you are in a position to initiate investigations of these 
communities, but you do not, yourselves, conduct these investigations ? 

Mr. Brown. I might put it this way : Our people sit almost continu- 
ously with the industry branches, as they are called, from day 
to day so that when it comes to our attention through the various 
representatives we have in these committees or branches that a certain 
type of industry, or, for that matter, a particular company, is adversely 
affected, then we decide whether to ask the Unitecl States Employ- 
ment Service, under the Bureau of Employment Security, to make a 
special survey of that community. 

reports on lay-offs 

Meanwhile they have automatic machinery which is operating all the 
time. Instructions have gone out to the staff of the Bureau of Em- 
ployment Security and to all the State and local employment offices 
that where there is a lay-off involving 50 or more men, or where there 
is short timing involving 200 or more men, a special report must come 
back to the regional labor supply officer; and as it is found that those 

1 The reports to which reference is made appear in this volume as Exhibit 6, p. 8197. 


conditions are accumulating in a community, the regional labor supply 
officer himself can initiate a survey. All that material is coming up to 
the Bureau of Employment Security, and to us, so that just as we are 
developing information from O. P. M. action at this end, we likewise 
have developed an automatic channel, plus special reports from the 
field, because we don't want to rely merely on information initiated 
at our end. 

Dr. Lamb. You emphasized the difficulty of securing satisfactory 
figures on the over-all problem which is developing, and indicated 
some skepticism on the part of your Division as to its magnitude. 
The position which you take, I think, is an understandable one — 
namely, that this situation changes fairly rapidly, that there are fac- 
tors which are local or limited to a single industry, that contracts are 
being let by the Army and Navy which affect these communities, and 
so on. And therefore I take it, from w^hat you have said, that your 
general policy is to operate a large-scale and well-worked-out over-all 
plan and machinery for continuous reporting and keeping up with 
developments, rather than to attempt to give out at any one moment 
over-all figures which might be alarming and, in your estimation, mis- 

Mr. Brown, That is right. 

Dr. Lamb. You described yourself as one of a number of "economic 
doctors" dealing with specific cases, and explained that in these surveys 
you are making you are using the Bureau of Employment Security 
machinery to assist you. To keep the analogy, the relationship between 
these physicians would, I assume, be quite close. It would be necessary 
for you to know that your prescription for an individual community 
had been carried out by the Labor Division. 


Mr. Brow^n. Yes, indeed. I serve as a member of the Labor Supply 
Committee, and in that capacity am concerned with the operations 
of reabsorption, so to speak, of men displaced due to priority action. 
However, there are various other channels which we use to secure 
reabsorption. The Labor Division is represented on the Plant Site 
Board of O. P. M. It is part of our job to be sure that they know of 
these communities where lay-offs have occurred, so that in the choice 
of location of a plant, where other things are equal, certainly, and 
even if they are not equal, there will be an effort made to place the 
plant in a community where there have been lay-offs. That is sound 
policy in the advancement of the defense ])rogram, because an adequate 
labor supply exists there to produce for defense. 

Dr. Lamb. However, with res])ect to such placement of plants, the 
number of those to be placed will never be in proportion, I assume, to 
the placing of contracts which Avould enlist the services of already 
existing facilities and men in communities spread throughout the 

Mr. Brown. Of course, the contracts are far greater in volume, and 
I would say it is better public policy to bring the job to the man in his 
existing employment relationship. 

Dr. Lamb. I wanted to establish the difference in magnitude and 
the possibilities of those two operations. Contract distribution is much 
more directly a means of solving this priority unemployment in most 


communities. Now, as I understand it, your division operates at two 
extremities of the process — first discovering prospective lay-offs, either 
from presence on the priorities committees or through the machinery 
you describe, coming up from tlie field regional offices ; and second, at 
the other end, assisting in the location of contracts for plant sites at 
exactly the right point to take care of the problem. 


Mr. Brown. We do what may be described as both the public health 
job and a case-practice job. In our public health job, we are watching 
curtailment of manufacture of automobiles, refrigerators, washing ma- 
chines, and such, and curtailment in the use of aluminum, copper, and 
other materials, to see that the impact of each is cushioned to permit 
adjustment, giving the overwhelming importance to the defense pro- 
gram. We never question for a second anything that is necessary for 
the greatest efficiency of the defense program. But if it would add 
to the efficiency of the defense program to make an adjustment in this 
or that direction, it is our job to watch that and in consultation to 
bring it up to Mr. Nelson. I sit on the clearance committee through 
which all these orders go before they go to Mr. Nelson. It is merely 
an advisory committee. That gives us an opportunity to discuss the 
labor-displacement aspects of the matter at the other extreme, after 
the curtailment has affected the community, and taking the more 
extreme cases, we pick it up at that end. 

Dr. Lamb. So it is essential that you keep close tabs between the two 
ends of the operation. Consequently, the success of what has come to 
be called the Buffalo plan or its equivalent, from community to com- 
munity, is directly related to the success of your operations, is it not? 

Mr. Brown. Yes, indeed. 

Dr. Lamb. That is to say, the Buffalo plan can't work unless con- 
tracts have been let in the community which will take up the slack, 
whatever the machinery for transferring the workers from one job to 
the other. 


Mr. Brown. The Buffalo plan is in essence, a method of transfer or 
a facilitation of transfer. On the curtailment side, the fact that the 
auto industry went down under curtailment orders was a condition 
with which we were concerned. The fact that contracts went into 
Buffalo for aviation and certain other things was a condition with 
which we were concerned from the manpower side. As an operational 
matter, Labor Supply, with the Employment Service, had a very im- 
portant job to perform in bridging the gap Hetween the lay-off here 
and the pick-up there. 

Dr. Lamb. In the case of Buffalo, the contracts were already let. 

Mr. Brown. That is right. 

Dr. Lamb. Prior to the announcement of the Buffalo plan. 

Mr. Brown. Yes. 

Dr. Lamb. And in fact our information from our field investigators 
is to the effect that the employment which was made possible at the 
time the Buffalo plan was announced was largely due to the avail- 
ability of these jobs at the moment. The aircraft and other defense 
jobs were open. In fact, we have also — and I'd like to check this with 


you — the impression that most of the workers involved were employed 
by these companies prior to the announcement of the Buffalo plan. 


Mr. Brown. There is, of course, a very normal process of transfer. 
The worker has initiative to seek another job, and through the employ- 
ment service system, he is assisted and directed to it. That is the normal 
process. The function of O. P. M. Labor Division is, you might say, 
to help oil the machinery, and we all know that every employer, in his 
employment procedure, follows certain patterns. He likes people of 
certain ages or men of certain training. The job from the O. P. M. 
standpoint is to help build up a community attitude, and a willing- 
ness on the part of employers, because this is defense, and it is an 
emergency, to broaden the scope of their hiring, to take men dis- 
placed from other plants in their own community. 

For example, an employer may say, "These men are laid off by 
this other employer, and in 6 months they will be reemployed by him." 
And O. P. M., through its representatives can say, "Despite that fact, 
it is important in your community, and in helping in the defense 
program, to take those men even for 6 months, because they are trained 
men, whose services we don't want to lose in the defense effort." 

Dr. Lamb. In this particular instance, the employment which these 
men secured in the aircraft and other companies was for the most 
part not secured through the assistance of the employment service. 
Is that correct? 

Mr. Brown. I would say that is normal. The figures, as I remember 
them, in England, where the employment service has been developed 
to a high degree of effectiveness, show about one out of five place- 
ments were made through the employment service. A large amount 
of the initiative in securing a job must come from the individual. 


Dr. Lamb. A^^iat I am concerned with here is how your Division — by 
that I mean the whole Labor Division — is in a position to assert that, 
for example, the Buffalo plan is a success, if it does not have a complete 
record of all the persons laid off and all the reemployment records 
on those persons. 

]Mr. Brown. I wasn't in Buffalo. I know of the development 
through being on the committee at the Washington end. I think that 
what was felt by those in charge was that this method — counting on 
community cooperation to bridge this job-to-job step — was highly 
desirable, and that the response in the Buffalo community was favor- 
able. As to the number of people who were actually placed, I don't 
know the figures. I am sure they were not as favorable as anyone of 
us would like, because there are various resistances, either from the 
individual worker or from the employer. It often happens that the 
man does not get the job in another plant in the community, but moves 
out to some other place, goes back to the farm or to some other town, 
and someone else comes in and gets the job. Now, the best thing we 
can do is to be sure he gets a job and the defense plant gets full 


Dr. Lamb. How do you know that he ^ets the job? This commit- 
tee wants to know what success the Buffalo method or other methods 
are havinoj. In the second place, we are interested in the Buffalo 
plan itself, because it has been offered as a model, and if the model 
was not successful, it calls in question the general methods, particu- 
larly when you had such favorable circumstances as you had in 
Buffalo, where the airplane plants were expanding rapidly when the 
Buffalo plan was announced, and took workers even before the 
machinery of transfer was set up. 

Consequently^, the real question is as to the method, and I am asking 
about the way in which the employment service can keep track of these 
people to enable you to have an accurate count. For example, your 
own figures, given us at Detroit, indicate that 44 percent of those who 
had found jobs, to your knowledge, found them on their own, and 40 
percent found them with the assistance of the employment service; 
and of those 40 percent who found them with the assistance of the 
employment service, a good many cannot be checked with the em- 
ployers, according to our information from the State employment 
service, because the jobs which they secured are described in lump, 
and the employers have never given a list of employees hired who 
came from the original plants. 

Mr. Brown. I would say that is normal. The proportion using the 
employment service — that is, 40 percent — is fairly high, and indicates 
that in an emergency a larger .proportion use it than otherwise. When 
a man loses his job, he hears of other openings; he has worked previ- 
ously in the Detroit areas, and so forth ; he is known there. His tend- 
ency is, rather than use the machinery, to go direct. I think anyone 
of us would. We first try out our best chances, then we fall back on 
the employment system. So we register to get unemployment insur- 
ance, and meanwhile they go to work for us, using the machinery. 

The first 44 percent of the cases had contacts. The next 40 percent 
were the ones who used the employment service, and even some of 
those went out and got jobs individually. 

Dr. Lamb. My point is that figures show 40 percent who we know 
have found jobs through tjie employment service, and 44 percent who 
found jobs themselves, and these figures are far short of the total 
of 3,500. By comparison with the 3.500 they account for only 1,250. 
On top of that, the number who actually registered with the employ- 
ment service and who didn't find jobs but who went into training is 
quite large, and of those who went through training and found jobs, 
the wages received are far below those of the ones who went direct 
and found jobs for themselves. 

Mr. Brown. My only answer is that in the handling of human 
beings, when you are trying to assist them in a readjustment in their 
work, you never get perfect results. Wliat you try to do is the best 
you can. As a student of the problem and as a member of the ad- 
visory committee of the Social Security Board, apart from my OiRce 
of Production INIanagement relationship, I would say that as far as I 
can see, the Buffalo plan is the best we can develop to help in this 

Mr. Curtis. I am trying to figure out what this method, or Buffalo 
plan, is. I have some of these figures before me. Up there in 
Buffalo 3,200 men were laid off by General Motors, and by September 
17, we learned that 1,275 had been reemployed, and then there were 


about 781 of whom there was no record, and 1,003 didn't have any 

Now, in spite of that 1.003 who didn't have any jobs, there were 
3,000 who had been reemployed or were hired by defense employers in 
the area at that time. Three thousand people were employed, and 
we have a record of the use made of the emplojanent service. 

I realize that none of these plans works very well. What was the 
Buffalo plan? Did you have an agreement or procedure by which, 
at a given date when these men went out of work, there was an agree- 
ment entered into that they go to work over there ? Was it written ? 

Mr. Brown. That was under the labor supply branch, Labor Di- 
vision. Commissioner Flemming is chief of that. But I will tell 
you to the best of my ability. My understanding was that the labor 
supply branch went to four of the principal employers of Buffalo and 
said, "See here, as an advantage to the community, as sound public 
policy, we would like your cooperation in the reemployment of these 
fellows who were laid off." 

Mr. Curtis. What else did they do ? 


Mr. Brown. It was a case of voluntary cooperation. There was 
no pressure or power on the part of O. P. M. to compel. The prin- 
ciple of free enterprise dominated the action. What was asked was 
their cooperation. Now, the idea was that the employment service, 
the employers and labor groups, all having a common interest in help- 
ing to lick this problem in Buffalo, would cooperate to get those men 

]\Ir. Curtis. They made a call on these four people standing with 
defense contracts, and explained the situation and asked them to take 
these men on, but no formal procedure or contract or agreement was 
entered into for the transfer of these people. Is that correct? 

Mr. Brown. It was through the New York State Employment 

Mr. Curtis. Did they have a written or formal agreement of any 

Mr. Brown. The agreement would be only a policy agreement 
anyway. The only specific thing would be that employer X would 
hire employee Y. X would say, "It's on the level that I am willing 
to cooperate. I will employ to the best of my abilit}^ as many of 
these fellows as I can, because of matters of skill, training, and age, 
which affect the employment of an individual." 

Now, O. P. M.'s interest was that those employers be as liberal as 
possible to broaden the scope of their employment procedure, to take 
as many as they possibly could. 

The Buffalo plan was merely an effort on the part of the O. P. M. 
to impress upon those who were hiring men to take fellows who had 
lost their jobs and facilitate through the employment service the 
actual registration and placement machinery. That was a normal job 
of the New York State Employment Service, but O. P. M. was inter- 
ested in encouraging and helping them in any way in the develop- 
ment of adequate machinery, such as arranging for more interviews 
and so that men could come in the evenings, getting cooperation, as 
I surmise — I am not sure of this — through the State employment 


service, or regional labor supply committee, enabling these men to 
come to the employment offices evenings, and have interviews, making 
it easier for the men laid off to register, and encouraging in individual 
companies the hiring of these men. 


Mr. Curtis. Then the answer would be that no plan was worked 
out to transfer those men en bloc from one plant to the other? 

Mr. Brown. It couldn't be. 

Mr. Curtis. There was no plan to transfer them individually and 
check back? 

Mr. Beoavn. As a student of industrial relations, I don't see how an 
employer could guarantee ahead of time to take a certain individual 

Mr." Curtis. Then the result in Buffalo wasn't any different from 
what it might have been if the mayor of the town had made a procla- 
mation and said, "I would like you to hire these men." 

Mr. Brown. No; I think there was a very real difference, because 
the agency that had to do with production for defense in Washington 
felt it was sufficiently important to have its people go to Buffalo and 
help build up public attention, and the cooperation of companies to do 
this job. 

Mr. Curtis. Those defense expanding plants wanted skilled workers. 

Mr. Brown. Yes. 

Mr. Curtis. And those workers wanted jobs, and they would have 
thought of that if O. P. M. hadn't. 

Mr. Brown. No. When an employer goes out to hire people he has 
certain specifications. Some employers like farm boys, others like 
older people, or younger people. Some would rather take new men 
and train them themselves, and others take men already trained. But 
when a certain bloc of men is laid off across the street, it isn't necessary 
at all that the employer on this side of the street go over and employ 
those men, lock, stock, and barrel. He has his own individual pattern 
of employment procedure. 

Mr. Curtis. Which is what the Buffalo plan didn't do? 

Mr. Brown. I think it did, but I would assume there is no way of 
testing it. Probably the figures that you mentioned, of 1,275 reem- 
ployed, might have' been 800 or 600 if there hadn't been this added 
impetus. The question whether anything could have been done to raise 
that figure by another thousand is anybody's guess. It was a first 
attempt, and done with entire good will, and probably the Labor 
Supply Branch learned a lot and will be able to get a better response 
in the future. 

Mr. Curtis. There were a lot more jobs available in expanding de- 
fense plants than you placed. 

Mr. Brown. That is true, but let's put ourselves in the position of the 
employer in those expanding defense plants. We feel we are free citi- 
zens. We are free enterprisers. We have to lick the defense job, but 
we have certain opinions as to what type of employees we want to hire. 
The men laid off by the automobile company will be used again by the 
automobile company. One employer says, "I will take new men from 
the country because they will be with me indefinitely. If I take these 
automobile workers they will be back in their old jobs in 6 months 
and I will have to hire somebody else." 


Mr. CuRTTS. That is what I am getting at. This whole thing de- 
pends on many and varied factors and reasons. The Buffalo plan 
wasn't a plan to abridge those. 

Mr. Brown. No magic. Yon just did the best job you could and 
developed as much response as you could. 

The Chairman. It was simply a volunteer plan. 

Mr. Brown. That is right. 

The Chairman. Creating the psychology of taking care of fellows 
who wouldn't otherwise be taken care of. 

Mr. Brown. That is right. 

The Chairman. It was volunteer, but you were attending to some- 
thing that was not attended to at all before. 

Mr. Brown. That was the mechanism of the employment service, 
but the O. P. M., with its national status, came in and said, "It is im- 
portant in the defense program that this be done." And immediately 
it affected judgments and attitudes of people who might otherwise not 
have been influenced. 


The most important agency in all these placement operations is, of 
course, the United States Employment Service. It has 32,000 em- 
ployees. There have been millions and millions of dollars spent by 
the Federal Government to build it up. It has 1,500 full-time offices, 
and, like the post office, it is a tremendous national machine. But at 
a time like this it has to be helped along and built up, and where a 
serious displacement occurs, as in Detroit, it is natural that the 
O. P. M. or any other defense agency should come in and help that 
machinery along and obtain public support and good will. 

Mr. Curtis. Mr. Brown, I have before me here a release bearing the 
date of August 9, 1941, from O. P. M. This is the first paragraph : 

Machinery set up through Government, management, and labor cooperation for 
remployment and training of 3,600 displaced automobile workers in the Buffalo 
industrial area should serve as a national model in overcoming the unemployment 
created by shut-dovpn of nondefense plants. Acting Director General Sidney 
Hillman, of Office of Production Management, said today.^ 


Now, I have tried to follow your testimony, but as nearly as I can 
figure out, that plan constituted an appeal to the employers to hire 
ihese men, and assistance to the employment service of some few inter- 
viewers and a few hours of their time. 

Mr. Brown. I think you have taken some of the flesh off the bones, 
which gives life to a thing of this sort. It is difficult to take up point 
by point what a procedure is that makes it worth while. I might say 
I am entirely convinced that the type of job done in Buffalo is worth 
while. It is difficult toi spell out the difference between that and the 
utterly automatic method of having men go down to the employment 
office, wait for jobs, and have the employer decide whether or not he 
goes to the employment office to seek men. What was done involves 
a good many intangible differences, but the most important one is not 
the change in machinery, but the change in attention given to that situ- 

1 See Exhibit 3, p. 8184. 


ation by the agencies of Government and the cooperation obtained by 
both the men and the management in nsing whatever machinery was 

Mr. Curtis. Bnt yon will admit that there was no tangible and for- 
mal agreement entered into, written or oral, for the transfer of any 

Mr. Brow^n. I wonld not want to answer that, because I am not sure, 
but I can find out for you. 

Mr. Curtis. There was no system to check individual cases, as to 
which came to the employment service and which did not? 

Mr. Brown. I think there was, because that is the normal employ- 
ment service procedure — keeping record of interviews. This is a free 
country. A man quits on Saturday afternoon and goes back to the 
farm. I don't think we as individuals would want him tagged, so to 
speak. If he does not want to come to the employment service to regis- 
ter for his benefits, I don't think we want at this stage to force him 
to report. 

Dr. Lamb. But what about the men who did not register with the 
employment service but were placed with the employers ? As I under- 
stand it, there is no record of the number of men who have been on the 
employers' rolls, but only over-all figures from these four companies as 
to how many former Chevrolet workers have been employed. 


Mr. Brown. May I use this illustration? I am chairman of the 
Social Security Committee of Social Science Research Council. We 
have been very much interested in labor-market surveys, to know just 
where individuals go, from here and there. In order to do that we had 
to spend $60,000 additional funds to make a study in Fitchburg, Mass., 
and two other communities. It took a tremendous lot of tnne. 

Dr. Lamb. But you did not have the support of the O. P. M., and 
this particular instance — the Buffalo plan — has been celebrated as per- 
haps the outstanding success of the O. P. M. Labor Division. You 
have, in this particular instance, no record of what became of these men 
who were employed by the very employers to whom you appealed. 

Mr. Brown. The study in Fitchburg took over a year. They had 
to go through the employment records — that is, individual names, pay 
rolls, and so forth. I can assure you that if time were given for field 
surveys, for the study of pay rolls, you could find exactly what hap- 
pened to most of these emploj^ees. 

Dr. Laimb. These things happened side by side in Buffalo: 3,200 
workers were laid off and several defense contracts were signed. The 
rolls of the Bell Aircraft Corporation could be checked, especially if 
they were in alphabetical order. 

Mr. Brown. But those are the easy ones. Where it is hard is where 
the man left Buffalo and got an even better job out of town. 

Mr. Curtis. Was this leaving Buffalo part of the Buffalo plan? 

Mr. Brown. No ; but it's part of human nature. 

Mr. Curtis. I agree with you that you can't change human nature. 
That is the reason I am not so excited' about Buffalo. 



Mr. Brown. It was a step in the right direction. It was a first step 
taken in using more effectively the greater public response to machinery 
for transferring men from one job to another. We have a lot more 
to do. It is a huge job, and O. P. M. as much as any agency of 
Government is the first to ask the advice and help of all public offi- 
cials in doing its job, because it has a pioneer job to do. 

Dr. Lamb. In closing this particular part of the discussion, I think 
it ought to be emphasized that there were laid off by General Motors 
3,244 men, and 6 weeks later, as of September 17, 1941 — these figures 
are from the galley proof of the material submitted at our Detroit 
hearing by the O. P. M. Labor Division ^ — as of September 17, 1941, 
there were reemploj^ecl and working 803 from those registered with 
the employment service, or approximately 25 percent of the total, and 
that figure of 803, as I understand it, was statistically arrived at by 
lumping the employers and not checking individual cases. 

In addition to this, about 472 not registered with the employment 
service had found employment themselves, and there again there is 
an absence of check. 

One other question about Buffalo. Do you happen to know for 
what period of time the representative of O. P. M., Labor Division, 
was in Buffalo? 

Mr. Brown. I don't know, sir. Of course, the regional labor supply 
committee is operating continuously. It is district 2 for New York 
State. It would be a question of how frequently they reconsidered 
the Buffalo situation. 

Dr. Lamb. My information is that all the work of follow-up after 
the meetings were held fell upon the State employment service, and 
that they are expected to do the entire job. 


Mr. Brown. May I explain the relationship there? The State- 
Federal Employment Service is tied into the labor-supply committee. 
It is a part of the Labor Supply Branch of O. P. M. You see, the in- 
tention was that O. P. M. should use, wherever possible, other agencies 
of Government, rather than duplicating, and it has had very good co- 
operation from the employment service. It would be quite wasteful 
for them to duplicate. I can assure you that O. P. M. appreciates 
tremendously the fact that New York State did carry on, and the 
fact that O. P. M. didn't have to have men there all the time. 

Dr. Lamb. My impression from the report of the investigator is that 
the State employment service does not appreciate the burden which is 
placed upon it and the lack of continuous assistance for particular 
emergency situations of this kind and would appreciate some machin- 
ery whereby the O. P. M. could keep, for the duration of at least the 
peak emergency period, representatives in the area to assist them. 

Mr. Brown. Which would be reflected in a request on our part for 
a very considerable additional budget. To lick the job of labor supply 
in this country will require a very substantial additional budget and 
additional funds to the employment service. But I am no expert on 

^ See statement by Eric A. Nicol, Detroit hearings, part 18, p. 7491. 


Dr. Lamb. There is another question I would like to ask with respect 
to the automobile lay-offs. Is there any way in which a more com- 
prehensive scheme than the Buffalo plan, or than the one worked out, 
for example, between General Motors and 13, A. W., could be put in 
force, whereby curtailments would be foreseen sufficiently in advance 
so that placement of individual workers, either in a job or in training 
for a job, could be part of a comprehensive and forward-looking 
arrangement? I ask for this reason: It seems to me that if it can 
be foreseen that as of the 1st of January, for example, a certain number 
of workers will be laid off' by a given company, and the management 
can tell you what plants will be involved, you could institute a pro- 
gram 3 months in advance for training and placement. Is that 
being done? 


Mr. Brown. Yes, indeed. You haven't asked me concerning other 
procedures that we are following. In the case of the automobile 
industry, in the very first curtailment programs, w^e had both man- 
agement and men in Washington discussing the various remedial 
steps involved in cushioning the slack and getting those men into 
defense production. 

The plan involves adjustment of hours, both on the civilian auto- 
mobile employment and on the defense production, including the 
question, should the automobile industry go into four-crew opera- 
tions — that is, four 40-hour-week shifts — which would take four times 
as many men. If, on the other hand, the automobile industry drops 
to 32 hours — and it has in some cases — that makes a ratio of men to 
facilities of 5 on the defense side to 1 on the nondefense. In other 
words, it pulls men into defense production that much faster, and 
tends to hold them in civilian production that, much longer by 
spreading the work in the civilian. 

There were also discussions on the status of the men to be trans- 
ferred, in point of seniority and training. I might say that the 
three major companies certainly have very adequate training facili- 
ties, compared to many other corporations. 

In addition, there were the questions of additional contracts going 
in there, the type of contract, the tank program, the questions of 
which communities should receive subcontracts. We have a working 
arrangement with 3 large motor companies now, whereby there is 
a two-way channel of communication as to which are the cities where 
they could place subcontracts and supply orders within their own 
corporation ; and from our end as to which are the communities where 
it would help most to do it. If there are 20 different communities 
that are able to produce a part for a tank or anything else, within 
the General Motors organization, they are taking our advice as to 
which of those 20 should be selected. The fact that other firms in 
some of these areas are adversely affected makes it desirable to dis- 
criminate in this manner. We are seeking the cooperation of all 
prime contractors for that sort of thing because they involve, through 
their orders, billions of dollars. It isn't a question of location of 
contracts from Government alone, but likewise the subcontracting 
jobs done by the big contractors. 

The Chairman. Thank you very much. We are a little bit behind 
•our schedule. We appreciate your coming here. 


(The following letter and statement were received subsequent to 
the hearing, and, in accordance with instructions from the chairman, 
were made a part of the record :) 

November 14, 1941. 
Hon. John H. Tolan, 

House Committee Investigating 
National Defense Migration, 

Congress of the United States, Washington, D. C. 
My Dear Congressman Tolan : Attached is a statement that I have written 
in answer to the request submitted in your letter of November 1. 
. In my statement I have tried to be as brief and concise as possible, realizing 
that a large volume of statistics could be compiled on the various subjects 
discussed in my statement. 

I am enclosing some lists of firms in industries that have been or are likely 
to be affected by priorities on materials or by production curtailment programs. 
Also, I am enclosing a sample copy of a community survey indicating the kind 
of material that we have on a large number of communities. These lists and 
other material are confidential. I request that tliey not be made a matter of 
public record.' 

Since Mr. Flemming has already submitted material to you regarding the 
Buffalo plan, for the publication of which arrangements have already been 
made, I am following your suggestion by not submitting further material re- 
garding the Buffalo plan. 

The enclosed statement, I hope, is the sort of material that your committee 
wished to have. 

Sincerely yours, 

J. Douglas Brown, 
Chief, Prioritiss Branch, Labor Division. 

550 House Office Building, 

November 25, 1941. 
Mr. J. Douglas Brown, 

Chief, Priorities Brancli, Labor Division, 
Office of Production Management, 

Social S.ecurity Building, Washington, D. C. 
Dear Mr. Brown : This is to acknowledge receipt of your letter of November 
14, with the accompanying statement, wliich we are including in our record, 
together with your testimony before this committee. 

In order to be able to evaluate more fully the priority unemployment problem 
and to check on the effectiveness of existing programs, our committee would like 
you to submit for the record brief summaries of the conditions in each of the com- 
munities which your agency has surveyed. We would, furthermore, like you to 
indicate which of these communities have already been certified and what favor- 
able results have been accomplished in each case as a result of tlie present 
certification procedure. 

If these summaries are already available, we would appreciate it if you could 
forward them to us immediately, so we could include them in our record of the 
Washington liearings. If they are not immediately available, could you forward 
them to us at as early a date as possible, so that we may include them in the 
record of our next hearing? 

I wish to thank you again for the material which you have already presented 
to the committee. 

With all good wishes, I am, 
Sincerely yours, 

John H. Tolan, Chairman. 

* Material referred to as confidential is held in committee files. 



November 13, 1941. 

There are certain difficulties in attempting to supply your committee with the 
detailed information that was requested. I shall, however, attempt to answer as 
hest I can the items which the committee has listed in outline form. 

The industries whose production will be curtailed or limited by material short- 
ages and allocution programs would include most industries in this country — all 
those that use the metals under priority, certain chemicals and various imported 
products. A list of the materials already subject to priorities and curtailment 
orders would indicate how widespread the effects of such priorities and curtail- 
ment orders will be. The following are some of the industries that have already 
been affected or are likely to be affected in the near future: Automobiles, silk 
manufacturers, refrigerators, vacuum cleaners, furniture manufacturers, office 
appliances, cooking utensils, sewing machines, radios, metal fasteners, iron and 
steel foundries, brass foundries, cleaning establishments, producers of various 
textile products using silk, rayon, nylon, and various scarce chemicals, building 
construction, rubber tires, other rubber goods, washing machines, coin machines, 
jewelry and ornaments, electrical household appliances, stoves, tableware, in- 
candescent lighting, manufacturers using cork, electroplating establishments, die- 
casting establishments, and agricultural implements. 


Conservation Order No. M-9-C curtailing the use of copper prohibits over 100 
different uses of copper after December 31 and curtails all other uses, except for 
defense and the conduction of electricity, to 70 percent of the firm's copper con- 
sumption in 1940. This order alone will affect over 100 different industries. The 
shutting off of virgin aluminum for practically all nondefense purposes and similar 
curtailment of scrap aluminum for nondefense has also affected a large number 
of industries. 

The Bureau of Labor Statistics has made estimates of factory wage earners in 
a large number of the industries mentioned above. For example, the Bureau esti- 
mates that there are 29,900 wage earners in the jewelry industry ; 54,600 in 
the stove industry ; 36,600 in the aluminum-manufacturing industry, including cast- 
ings, shapes, and aluminum ware ; 75.900 in the agricultural-implement industry, 
including tractor manufacturing ; 50,600 in the refrigerator industry ; 9,300 in the 
domestic washing-machine industry; 186,6no in the wood- and metal-furniture 
industry; 62,500 in the radio industry, including the manufacture of phonographs; 
46,200 in the business-machines industry; 65,700 in the rubber-tire industry; 
64,600 in rubber goods other than tires ; and 10,100 in the sewing-machine industry. 

It is impossible to predict the trend of employment in the various industries 
already mentioned. The trend of employment in each industry depends upon the 
scarcity of the materials for nondefense purposes, which in turn depends upon 
the availability of ships for importing and the rapidity with which defense pro- 
duction consumes scarce materials. It also depends upon the extent to which 
these industries are able to obtain defense work and to engage in defense produc- 
tion. For example, it would have been impossible to predict in August that em- 
]-.loyment in selected IMichigan automobile plants during the week ending October 
25 would amount to a total of 347,189 compared with a total of 355„371 represent- 
ing the peak employment total for these same plants as reported in May or July 
before the change-over. 

We have lists containing the names and locations of firms in a large number 
of industries that have been or may be affected by material shortages or pro- 
duction cui-tailment programs. Let me emphasize that the lists for the various 
industries are not complete. 

Reductions in working time or lay-offs from a few hours to a number of weeks 
have occurred in thousands of plants in this country because of material short- 
ages or allocation programs. In our files we have records of hundreds of firms 
which have either experienced lay-offs or reduced working time or anticipate 
that they will experience reduced emplo.vment because of priorities. Although a 
list of such plants might be compiled, the degree to which the firm has been 
affected or threatens to be affected and the period of time that the firm will be 
affected is not always certain, so that the compiling of such list presents numer- 
ous difficulties. 

A large number of communities have been affected by material shortages and 
curtailment programs. 

60396 — 41— pt. 20 — —10 



We have surveys of over 100 communities in vphich one or more plants have 
been affected by priorities or threaten to be affected by priorities. The Labor 
Division, in collaboration with the Division of Contract Distribution, has already 
certified to the armed forces for special consideration more than a dozen com- 
munities that are threatened with serious priority unemployment. The com- 
munity surveys range from 3 to 20 pages in length, and generally include a statis- 
tical summary. In addition, we have material on hundreds of other communities 
Indicating that one or more plants in the community have experienced or are 
threatened with curtailed employment because of priorities. The staff of the 
committee is thoroughly familiar with all this material. Representative ex* 
amples of community surveys are being submitted. 

There are various ways to alleviate dislocations resulting from priorities and 
production curtailment programs. One obvious way is to assist the firm to 
convert to defense work. In this way effective working forces can be maintained 
intact so that the working unit is not disrupted. The problem of assisting firms 
to convert to defense work falls primarily under the jurisdiction of the Division 
of Contract Distribution. However, the Labor Division has talvcn an active part 
in programs for the spread of defense work. For example, I participated in the 
negotiations that led up to tlie program adopted by the Office of Production Man- 
agement Council on August 19 and embodied in the Army directive of Sep- 
tember 5, by which communities threatened with serious priority unemployment 
may be certified to the armed forces for certain special considerations in the 
letting of defense contracts. 


So far over a dozen communities have been certified to the armed forces by 
the Office of Production Management, beginning with Manitowoc, Wis., which 
was acted upon by the Labor Division on September 11, and which received its 
first contract under the certification procedure on September 24. In addition to 
the certification of communities for special consideration in the letting of defense 
work, there are other means of avoiding or alleviating dislocations and labor 
displacement as a result of priorities. The concern may be able to utilize 
substitute materials that are not under priority or that are less scarce. This has 
occurred on a widespread scale — indeed, so widespread that it renders any col- 
cuuriHons of displacement based on previous consumption of the materials invalid. 

In addition to the utilization of substitutes or conservation on the use of 
the material, dislocations and labor displacement may be modified through 
allocations of the material in certain ways. The Priorities Branch of the Labor 
Division has staff members assigned to each of the commodity or industry 
branches of the Office of Production Management, who are there for the pur- 
pose of anticipating labor displacement and working out programs for alleviating 
or remedying such displacement. Many allocations have been made bearing in 
mind the effect of such allocations upon employment In the community or in 
the industry. Where small amounts of material will keep a large number of 
workers employed, such factors have been borne in mind in making allocations 
of the material. 

Where the firm, for various reasons, does not convert to defense, where the 
community is not certified, where substitution or conservation have not been 
pursued, and where allocations of small amounts of material will not solve the 
prfiblem, it may be necessary to transfer and train the workers for some type 
of work in another firm. The transfer and training of employees is part of 
the work of the I-abor Supply Branch of the Labor Division. The success of 
the certification procedure and of obtaining small amounts of "critical" materials 
in order to avoid large lay-offs, both of which fall within my branch of the Labor 
Division, depends upon one's definition of success. We have, in numerous 
instances, been able to avoid sizable lay-offs by obtaining material for certain 
firms which either had not been receiving their equitable share of the material 
or which were in the process of conversion to defense work, and whose staffs 
would be disrupted if they had not received this material prior to the completion 
of their program for conversion. 

It is a little early to attempt an evaluation of the success of the certification 
procedure. Following certifif-ation, contracts are placed in the certified com- 
munity. However, it takes some time before contracts placed can be transformed 
into increased employment in the community. Nevertheless, we are now planning 


to withdraw certification from certain communities wliere it appears tliat suffi- 
cient defense worli lias been placed, so that over a period of time there will not 
be a serious problem of priority unemployment unless certain unforeseen changes 


Mansfield, Ohio, for example, has received prime contracts from the Army for 
$6,350,000 since certification, and in addition $380,000 of subcontracts on ord- 
nance material alone. Furthermore, one company there is apparently in line for 
work on an item in connection with cliemical warfare. Since the labor costs 
will perhaps average 35 percent, the contracts already placed in Mansfield since 
certification will amount to a pay roll of over $2,000,000, which presumably will 
be spread over a 10-month period. In addition, Westinghouse has indicated that 
they will transfer to their Mansfield plant as rapidly as it can be arranged 
some of the defense work that they have been carrying in their eastern plants. 

The certification procedure has not been so successful to date in Meadville, 
Pa., because the equipment of Talon, Inc., is specially designed for producing 
zippers, and zipper-making machines cannot be used for military items. Con- 
sequently, in this case it would be necessary for the concern to put new equip- 
ment into its present plants in order to engage in defense work in buildings other 
than its present toolroom. Through allocations and a program of conservation 
and substitution, this company has been able to carry on operations at 75 per- 
cent of normal so that it has not felt impelled to change its plants over to new 
types of defense business. 

The success of the certification procedure depends upon the willingness of 
concerns to bid for defense business. This most companies under present 
circumstances are very ready to do. Consequently, we do not anticipate future 
difficulties of any magnitude on this particular score. 

We plan to cope with dislocations due to priorities according to the pattern 
that has already been established, which includes certification of distressed 
communities, allocations of materials to firms where a small amount of mate- 
rials will prevent a large volume of unemployment or where failure to receive 
materials would impair a program of conversion from nondefense to defense 
work, the use of substitute materials and measures for conservation, the train- 
ing of workers for defense work, and the placement of displaced workers in 
defense employment. 

The Chairman. Our next witness is Mr. Biddle. 


The Chairman. Mr. Biddle, we are pleased to have you here with 
us this morning. Would you please outline for the committee the 
main features of the program developed by England for transferring 
labor from areas of declining industrial activity to more active areas, 
indicating to what extent migration is voluntary or compulsory and 
what allowances are made for lodging, transportation, the moving of 
families, and for meeting any continued liabilities in the area left ? 

Mr. Biddle. May I ask the indulgence of the committee? I have 
been back a fairly short time and have been rushed about the coun- 
try on a number of activities in connection with my mission. I am 
testifying on very short notice, and with very inadequate preparation. 

The Chairman. We will give you all possible latitude, Mr. Biddle. 
Your prepared statement will be entered as a part of the record. 


(The statement referred to above is as follows:) 


BiiiTiSH Manpower and the Wak 


The following statement is presented in three parts : 

Part I. Mobilization and distribution of manpower. 

Part II. Brief outline of recent changes in British social security measures. 

Part III. Labor policy and administrative methods. 

I. Mobilization and Distribution of Manpower 

From the viewpoint of the American observer, the administrative machinery 
for the mobilization of Britain's manpower for the armed forces and war 
industries possesses one outstanding characterstic. And that is the centralized 
responsibility of the Ministry of Labor and National Service for all matters 
relating to manpower. Thus, since the beginning of the war, the Minister of 
Labor and National Service has been made responsible for the registration 
of men called up for national service (this applies to the call-up for tlie 
military service and essential war industries) ; the application of the Schedule 
of Reserved Occupations ; the combing out of skilled men from the armed 
forces as they have become more urgently needed in growing defense indus- 
tries ; regulating the distribution of labor between occupations according to 
war-time priorities; transferring workers needed in defense industries located 
at some distance from their homes ; the organization of a comprehensive sys- 
tem of industrial training ; provision of war-time health and welfare facilities 
for workers. 

Meanwhile, through the local Labor Exchanges, the Ministry has carried on 
its day-to-day work of administering Unemployment Insurance and the public 
employment service. Furthermore, the Ministry carries on its established ma- 
chinery for dealing with industrial disputes ; namely, the conciliation service, the 
National Arbitration Tribunal, etc. Also, since the beginning of the war, the 
Factory Inspection Services have been transferred from the Home Office to the 
Ministry of Labour and National Service. 

Thus, it will be seen that Parliament has vested in the Ministry of Labour 
and National Service substantially all ofthe functions which, in the United 
States are carried out by the Department of Labor, the Labor Supply of the 
Office of Production Management, the Employment Security Division of the 
Social Security Board, and insofar as they are comparable, the services 
cor re.spon ding to those which are administered in the United States by the 
National Labor Relations Board and the Selective Service system. Moreover, 
account might also be taken of the still further diffusion of responsibility 
in the United States resulting fi-om the fact that some of these responsibilities 
are vested in tlie governments of the several States. 

During the last war. the above-mentioned functions- relating to labor supply 
were in Britain disiiersed among an even greater number of agencies than 
we now have in the United States for that purpose. In other words, from the ' 
experience of the last war, Britain learned to concentrate administrative responsi- 
bility for all manpower questions under the Ministry of Labor and National 

The ob.jective of the Britisli manpower policy has been to mobilize and 
augment its labor forces and to arrange for its distribution between alternative 
uses. The manner in which this is accomplished might be conveniently divided 
into these three stages : 

{a) To withdraw from the total available manpower the several million men 
and women needed for the armed forces and the civil defense services. 

1 In addition to tlie official documents mentioned in the statement, material made avail- 
able bv I'olitical and Economic I'lanning, London, contributed greatly to the preparation 
of this statement. The author is also Indebted to Dr. Carter Goodrich, of Columbia Uni- 
versity, who has recently returned from a mission to Britain, for the material which he 
made available and for his valued suggestions. 


(ft) To provide the necessary manpower to maintain the output of goods and 
sei-vices for the armed forces and for essential civilian needs. This stage involves 
not only the employment of those who were at the time unemployed or unoccupied 
but also the provision of adequate resources for industrial training and retraining 
and the transfer, on a large scale, of men and women from less to more essential 

(c) To bring about the maximum of efficiency of all woi'kers. In this connec- 
tion, the British have found it necessary and desirable to increase the scope of 
existing social services and to add a number of new social services which will 
later be referred to under this heading. 


Men registered for the armed forces are "reserved" from military service at 
specified ages in cases where they are in one of a great variety of skilled occupa- 
tions. Thus, certain skilled workers are "reserved" in civil occupations if above 
the age of 25. In other occupations, reservation takes place at age 30 or 35. The 
purpose of the schedule is to enable the demand for men for the service to be met 
with the least possible dislocation of military and necessary civil production. In 
the most recent "Schedule of Reserved Occupations," promulgated April 10. 1941. a 
new principle was adopted by the Ministry of Labor and National Service known 
as Protected Work. From that date not only the occupation but the work upon 
which the men are engaged is taken into account. Under the latter schedule, a 
lower age of reservation is now fixed for a man in such an occupation engaged on 
work which is protected. All places of employment in which work is protected will 
be included in a Register of Protected Establishments. Firms are being admitted 
to the latter register if they are (a) in certain essential industries such as chem- 
ical manufacture; (&) if they are producing as a rule not less than 80 percent of 
current output for the government or for export ; (c) road, rail, and air transpor- 
tation ; ((/) the building industry ; (e) if they qualify as a nucleus firm under the 
plans for industrial concentration (under this plan several industries may group 
about one nucleus firm to carry on for the duration of the war, especially where 
total output for the industry is reduced because of wartime restrictions.) 

The deferment procedure is complementary to the arrangement for protected 
industries. Men below the age of reservation for their occupation or in an unre- 
served occupation doing essential work, can have their military service deferred. 

The Schedule of Reserved Occupations is a product of the experience of the last 
war where a large number of skilled men were allowed to volunteer for service 
and later to be recalled for their civilian occupations. In the present war, not 
only was there the question of the highest possible rate of protection of muni- 
tions and equipment, but the necessity for recruiting and equipping large num- 
bers of men and women for the civil-defense services. 

The first Schedule of Reserved Occupations was published in January 1939. 
Until the outbreak of the war, the schedule imposed no restriction upon persons 
joining any branch of service in their trade or professional capacity. Restric- 
tions applied only to service outside of volunteers in a trade or professional ca- 
pacity which would involve whole-time duty in time of war. A war-time schedule 
came into operation at the outbreak of the war when compulsory military service 
was adopted, affording a greater measure of reservation than the original sched- 
ule. The schedule is constantly under review and is amended from time to time 
in the light of the varying manpower needs of national defense. Amendments 
are made under the authority of the Ministry of Labor and National Service, 
generally as the result of recommendations by a Committee on which the Service 
and Supply Departments are represented and the meetings of which are also 
attended by representatives of other Government departments concerned. As a 
result of the changes made during the past year, many thousands of men who 
professionally had been reserved, have been released from the military service 
and vice versa. For example, there were a large number of clerical "workers, 
teachers, and professional men whose age of reservation was reduced from 80 
to 25. On the other hand, a considerable number of occupations which were 
professionally reserved only up to the age of 30 were reserved until 35 owing to 
the importance of the work involved. In certain cases, men have been provi- 
sionally released from the service to retiu'n to industries in which their .skills 
were needed. Thus, as a result of this kind of combing-out process, 30.000 men 
working in the mechanical trades were released from the Army in the spring and 
summer of 1940. 





By the summer of 1941, unemployment had virtually ceased to exist. In Brit- 
ain as of July, 1941, there were only 219,577 wholly unemployed and registered 
at the Employment Exchanges compared with 840,027 on April 15, 1940. 219.577 
wholly unemployed may seem to indicate considerable unemployment but in point 
of fact, most of these people were in transit from one job to another. I personally 
analyzed the live registers of several employment exchanges during the past 
summer and found that the majority of the persons whose names appeared there 
had been unemployed but a short time (three weeks or less), and were clearly in 
transit from one job to another. Those who had been unemployed for a longei 
time were generally found to be persons in the upper age group actually unem- 
ployable either because of ill health or other causes. 

The special effort which is now in process is directed to those who are not 
ordinarily employed but who may be unoccupied at the present time. This par- 
ticularly applies to women. The principal device for finding out what nnmbers are 
available from this category is the Registration for Employment Order, 1941. 
This Order allows the Minister of Labor to specify any class or description of 
persons and call upon them to register. After registration, persons can be called 
upon for a selection interview and can then be required to take up a new employ- 
ment even if this involves changing the person's existing employment. It is 
stated that every attempt will be made to reach agreement as to the type of work 
into which the person can best be fitted. The only age groups that had been 
registered up until August of this year were men of the ages 41 and 42 and women 
between the ages of 20 and 25. Registration of women of the 25-30 year age 
groups was planned to take place before the year end. 

Unemployment trends. 

In June 1939 there was in Britain an estimated totally occupied population 
of 22,000.000 persons. In June 1939, there were 13,774,000 insured workers in 
employment of whom 4,401,000 were women and girls (Ministry of Labor 
Gazette, 1940). There were at this time some 1,350,000 unemployed registered 
at the Employment Exchanges. Since that time, a very large number of men 
have been ab.sorbed in the armed forces, but despite the demands of the armed 
forces and war industries, it is interesting to note that unemployment increased 
steadily during the first winter of the war. It was not until March 1940 that 
any real improvement was recorded. By the middle of April 1940, the total 
had fallen to approximately 972,(X)0, the lowest total of unemployed for twenty 
years. The figure maintained fairly constant through October and then decreased 
steadily to the low figure already mentioned (219,577) in July 1941. 

The so-called priority unemployment problem, it will be seen, continued to 
be a major factor as late as the second winter of the war. 

Transfer of worTcers from nondefense industries. 

The second main way of finding workers for defense industries is by trans- 
ferring them from nondefense industries. This can be done in two ways — 
financial and direct — for effecting the transfer of workers and other resources 
from nondefense to defense industries. Britain's demand for nonessential 
(from a defense point of view) commodities has been reduced by increasing 
income and excise taxes through compulsory savings and by encouraging vol- 
untary savings. 

But these financial measures have not been sufficient, and direct measures 
are being used increasingly. Rationing of raw materials such as wool, cotton, 
and leather and the Limitation of Supplies Order were the first steps and 
these were succeeded by "point" rationing of clothes and footwear. There are 
indications that rationing of other scarce goods will logically follow. It has 
often been pointed out that only if rationing is extended will it be possible, 
in a country where there is still considerable income inequality, to reduce 
nondefense supplies further. Where buying power is unequal, total supplies 
have to be very high (in relation to the size of the population) to insure that 
the low-income groups will be able to procure necessities. 

The aim of the Limitation of Supplies Order was to conserve raw materials 
and also to set free storage space and displace labor increasingly in the manu- 
facture of these materials which were subject to limitation. This second 
object was, however, defeated in many cases because factories simply worked 
short time when production quotas were cut. Habit, domestic and other 
ties kept many workers from accepting essential jobs at even higher wages. 


After much public criticism, the Board of Trade was therefore forced to take 
action in order to concentrate production in a reduced number of factories 
working full time. An explanatory memorandum of the Board of Trade stated 
that it was for each firm which wished to qualify as a "nucleus" concern to make 
arrangements with other firms to make it possible to operate to capacity. Firms 
would also be required to insure that production was concentrated in areas where 
competing demands for labor for defense industries were less severe and that the 
labor at least was adaptable and of the type likely to be absorbed in new employ- 
ment. During the early months, very few satisfactory voluntary arrange- 
ments were completed. Last summer the Board of Trade was forced to lix 
dates after which Government arrangements would be enforced. 

Concentration of industry: 

The concentration of industry is being accomplished in two ways : First, 
by closing down factories, thus allowing personnel to find work in defense 
industries, and, second, where the factory is maintained intact as a productive 
vinit with a new defense industry output. The second method is resorted to 
less frequently. Competent authorities point to the advantage of the second 
method as a means of keeping efficient management intact. This point of 
course involves the whole problem of subcontracting as a factor relating to 
the utilization of the full labor supply. There appears to have been developed 
no plan of universal application to all industries in respect to this problem, 
but there has been a good deal of improvisation on the "cut-and-try" basis within 
various branches of industry. So great has been the friction in a number of in- 
dustries (as for example, the building industry) as to bring up the question of 
a basic reorganization of that industry to meet developments of the war as 
well as to deal with the post-war reconstruction problem. 

Industrial training. 

The development of the defense Industries created a steadily increasing demand 
for certain types of skilled workers, machinists, etc. To meet this demand, the 
Ministry of Labor and National Service asked employers to undertake the training 
of workers who showed promise and at the same time converted the Government 
Training Centers, used before the war for training the unemployed, into schools 
for producing workers for the defense industries. Following the change of gov- 
ernment in May of 1940, aggressive steps were taken to develop the Government 
Training Centers and renewed vigor was added to the campaign for employers to 
cooperate by training men in their own workshops. 

At the Centers such trades as draftsmanship, fitting, instrument making, 
machine operating, sheet-metal working, electric and oxy-welding are taught. 
The field of requirements is being constantly widened and many older men hitherto 
unemployed are being given a chance to acquire a trade. The training which is 
now being given will involve instruction of persons who have no special skill and 
in other instances provides for up-grading courses for workers who already have 
a certain degree of skill. Usually the employer provides the equipment and 
instructors and the Ministry pays for them on the basis of so much per student- 
hour. Some of the newer establishments provide for the training of women as 
well as men. An agreement between the Engineering Employers' Federation and 
the Amalgamated Engineers Union to allow men and women to be trained "on the 
bench" provided that the allowances given be not greater than those given at 
the Training Centers and provided that the men when trained should not remain 
in the factory where the training was received. 

Some time after the outbreak of the war the Centers were thrown open to men 
already in employment and since that time a man has been able to give up his 
job, provided it is not essential to the war effort, in order to train himself for a 
defense industry. The invitation to men employed in nondefense jobs to change 
over to defense industries met with very large response and in the latter months 
of 1940 and the early months of 1941 approximately half of the men in the Centers 
were men who came to training from other employment. The Centers consist 
of big training workshops, run on factory lines. Training is chiefly practical. 
In August 1941 there were 35 Government Training Centers. For a long time the 
flow of recruits to the Centers was restricted because of the low rates of pay ; 
also partly because the Centers had once been only for the unemployed. Last 
summer (1941) tse wages of trainees were considerably increased. The present 
rates of payment to trainees may be said to equal approximately the minimum 
rate for ordinary unskilled labor. 


At the present time it is estimated tliat between 150,000 and 200,000 worliers 
a year are passing tlirougli the Government Training Centers. By far the greatest 
number of worliers are still being trained in private industry or in Government 
factories "on the bench." Here the rates of pay of trainees are fixed by means 
of the bargaining process between Employers and Trade Union Councils within 
the industry. Compensation is also now provided for factory owners for time lost 
owing to the liabilities incurred when trainees are taken on. 

It is the opinion of some critics that adequate recognition still is not being given 
to the need to alter production methods, not only in order to economize on skilled 
labor — as, for example, by avoiding short runs of production — but also in order 
to simplify the training. Many critics also believe that there is still insutficient 
recognition of the fact that the range of jobs for women workers is constantly 
widening and that there are few jobs for which women cannot be trained. I 
observed women taking part in a wide variety of industrial operations. The 
manager of one important defense industry plant informed me that a little 
over fifty percent of the personnel there were women. INIany of these women were 
engaged in high precision work requiring considerable skill. The manager stated 
that for many of the operations he preferred women and added that he hoped to 
increase considerably the proportion of wom.en employed as the plant was being 
expanded. In a number of instances I saw women employed on various processes 
such as welding, grinding, and boring machines and riveting operations wliei'e 
their performance was sa'd by the foremen to be excellent. 

Briefly summarizing the provisions for compensating the workers while in 
training, the position is this : (a) The worker receives a wage as a trainee which 
will be supplemented by an additional subsistence allowance if he has a wife 
and/or dependent children; (b) if ti-aining takes place away from the worker's 
home town, he will receive his fare to the Training Center, a subsistence allow- 
ance while undergoing training, and payment for the lo,<5s of time while traveling 
to the Center. If training takes place in a Government Training Center, all of 
these costs will be met by the Government. If training takes place in industry, 
the costs will be met by the employer if such has been the pre-war practice in the 
particular industry. Otherwise the GoA^ernment will subsidize the private em- 
ployer for his training costs. 

Transference of lahor. 

Employers in defense industries are required to notify the Labor Exchange of 
all vacancies. Where such vacancies cannot be filled locally, the local Exchange 
will notify the Region and so on to the Central Clearing House until the vacancies 
are filled. To illustrate what happens in the case of transferred workers, I am 
using the following hypothetical cases : 

Take the case of Henry Thomas who, we will assume, has been working in 
Yorkshire in an industry whose output has been decreased because of the war 
restrictions. He has lost his job and so goes to the Labor Exchange in Leeds. 
He has the skill and work record that indicate he can fill a job in an essential war 
industry in Birmingham. He agrees to take the job. The Leeds Labor Exchange 
will then pay his train fare to Birmingham and will pay him five shillings for 
the time which he will lose in transit (10 shillings if the time in transit exceeds 
four hours). On his arrival in Birmingham, Thomas will be directed to a hostel 
where he can obtain temporary living accommodations until he can be billeted. 
This is the responsibility of the Industrial Welfare Workers now attached to the 
Labor Exchange. Thomas will then report to the Birmingham Labor Exchange 
and be directed to his new place of employment. If he has left his wife and chil- 
dren in Leeds and continues to maintain a home for them there, he will receive, 
in such case, a maintenance allowance of three shillings a day from the locai 
Labor Exchange in addition to his wages. If he desires it, the Industrial Welfare 
Worker of the Labor Exchange has a duty to put him in touch with some com- 
munity organization in Birmingham which will assist him in adjusting to his 
new living conditions. It may be such an organization as the Y. M. C. A. or a 
worker's club or some other existing orcanizition iu the community. 

It happens that his new place of work in Birmingham employs more than 250 
workers. The plant is, therefore, required by the Ministry of Labor to operate 
a canteen which serves hot meals. This is because of the tendency towards 
restriction of diet under war ration conditions. The factory inspector of the 
Ministry of Labor is also empowered to require that full or part-time medical 
services are available at the factory. The Ministry of Labor has also required 
that the factory shall have on its staff a welfare worker familiar with the 
personnel work. 


Now let us take the imagined case of George MacFarlane who, we will as- 
sume works in a little town in Worcestershire. George has lost his job because 
of war conditions and he does not have the type of skill that is in demand in a 
war industry. He discusses the matter with an interviewer at his local Labor Ex- 
change It 'is arranged that he shall take a coarse at the Government Training 
Center in Birmingham which is one of thirty-five such centers operated by the 
Ministry of Labor throughout the county. He goes to Birmingham, his fare 
paid by the local Labor Exchange. He reports to the Birmingham Labor Ex- 
change, is referred to the training center for his course of training. While in 
training, he will receive a nominal weekly wage, plus his board and lodging. Since 
he is maintaining a wife and children at his home in Worcestershire, he will re- 
ceive a maintenance grant for their support that will continue during his train- 
ing course. While he is still in Worcestershire and unemployed, waiting for 
posting to the Birmingham Training Center, he will receive his unemployment 
insurance grant at his local Labor Exchange. 
Economy of manpower in defense industries. 

In this section I have in general considered the transfer of workers from non- 
defense to defense industries. Another important factor is the distribution of 
various classes of labor within defense industries. It is not only a question of 
whether the job is necessary for the war effort, but also whether the man is 
necessary for the job. Since skilled workers were scarce as compared with 
unskilled, heavy labor as compared with ordinary labor, men as compared with 
women, young and unattached workers as compared with others, it became clear 
that no job could be allowed to retain a woi ker in one of the scarce categories if it 
could possibly be carried bv a substitute. Tlius, bottlenecks are caused by the 
shortage of workers of the particular kind of skilled experience. The Ministry 
of Labor and National Service called for a special registration of machinists 
under the Industrial Registration Order, 1940, also of ex-shipyard workers under 
Industrial Registration Order, 1941, of Marine Engineers, merchant seamen and 
coal miners under the Registration for Employment Order. Last summer when 
coal stocks had fallen below a safe margin, the Government, seeking to increase 
stocks bv 20,000,000 tons by the end of October, estimated the need for 50,000 
additional miners. Because of the fact that the total output was materially de- 
creased following the loss of continental markets, many miners had transferred to 
other essential industries such as aircraft production. It will probably be very 
difficult for the Ministry of Labor to withdraw ex-marine engineers or coal miners 
from aircraft firms whose objections are supported by the Ministry of Aircraft 
Production. It was this type of problem that strongly supported demand for the 
establishment of a Minister of Production with overriding powers during the 
production debates held in Parliament in July, 1941. 

The transfer of workers from one type of work to another has sometimes been 
held up because of difficulties of wages and other conditions. Men, for instance, 
were needed for various kinds of heavy work such as iron ore mining, land drain- 
age. Tliese could be obtained from aircraft factories where semiskilled work is 
now being undertaken by women, but wages in the aircraft factories have been 
considerably increased, thereby making the men very reluctant to transfer to jobs 
at ordinary unskilled labor rates. 

Because of the financial policy of the Government, directed to the objective of 
maintaining stable prices (increased taxes, stimulation of savings, price and rent 
controls, etc.) these inequalities in the wage structure do not appear to have 
increased in Britain at as fast a rate as they appear to be rising at the present 
time in the United States. 

On the other hand, there is in the United States still a large pool of unemployed 
available for training in defense industries. Moreover, there remains still the 
priority unemployed to be absorbed in defense industries. Hence, transferring of 
semiskilled workers among defense industries has not yet developed in the United 
States to the same degree. 

Great pressure has developed in England to economize in the use of youth and 
women who are free to leave their homes, since many women have had to leave 
home to join the services or to move to districts where there were heavy demands 
for labor in defense industries. There is an increasing pressure to release such 
women from jobs in offices, factories, and shops which can be done by older women, 
even in cases where younger women previously had been engaged to replace men 
who had entered the service. 

There has been much criticism of the location of some of the new factories to the 
effect that they are not built in areas of ample labor supply, and this problem has 


been increased by the necessity for the evaciiation of women and children from 
target areas, in which case they often take the living accommodations required for 
war workers. 


Many critics of the Government assert that no comprehensive wage policy has 
been developed in relation to a coherent national financial policy. They contend 
that because of this deficiency certain of the newer defense industries ofter higher 
wages than obtain for corresponding jobs in tlie older industries and thereby tend 
to churn the labor supply unnecessarily and to increase mobility of labor to an 
undesirable extent. 

Early in 1941 the Ministry of Labor issued the Essential Work (General Provi- 
sions) Order, 1941, and has subsequently issued a number of specific essentia] 
work orders. Under the provisions of the Essential Work Order the Minister 
may schedule any undertaking as an essential undertaking if he is satisfied that — 

(a) the terms and conditions of employment are not less favorable than the 
recognized terms and conditions as provided for by the Conditions of Employment 
and National Arbitration Order, 1940 (i. e., wage standards and working conditions 
are up to that standard) ; 

(&) that satisfactory provision for the welfare of persons employed in the 
undertaking exists ; and 

(c) that where, in his opinion, provision should be made in the undertaking for 
the training of workers, adequate provision exists for such training. 

The Essential Work Order also provides that once an undertaking is scheduled 
an employer may not dismiss a woker (except for sei'ious misconduct) nor a 
worker leave the employ of the establishment without the permission in writing of 
a National Service Officer; that (except in cases of serious misconduct) em- 
ployment shall not be terminated without a week's notice to the employee, and 
further provides that any person employed in such an undertaking shall at all 
times receive a "normal wage" for the prescribed working hours in that industry 
if that person is during normal working hours — 

"(1) capable of and available for work; and 

"(2) willing to perform any services outside his usual occupation which, in the 
circumstances, he can reasonably be asked to perform during any period when 
work is not available for him in his usual occupation in the undertaking." 

The Essential Work Order defines the way in which the "normal wage" is cal- 
culated for the purpose of this "guaranteed wage" provision. The Order also 
provides for the establishment of appeal machinery through which both employers 
and employees may appeal from the decision of the National Service Officer where 
it is so desired. 

If a person employed in a scheduled undertaking absents himself from work 
without leave or reasonable excuse or if he is persistently late at work, the 
Order provides that the employer may report such absence or lateness to a 
National Service Officer (at the local Labor Exchange) who has power to 
require punctuality and regular attendance. 

Essential Work Orders applying to particular industries had been issued in 
respect of four ma.i'or groups of labor, up to August 1041 ; i. e., shipbuilding and 
ship repairing; the merchant navy: coal mining; building and civil engineering, 
A separate plan has also been developed in respect of dock workers. 

The Select Committee on National Expenditure (a Standing Committeeof 
the House of Commons) in its recent reports has had much to say concerning 
the unemployment of labor resulting from excessive waiting time and because of 
ahsenteeisin" (i. e., unexcused absence from work where no sufficient reason is 
subsequently given by the absentee). The first of these problems is partly a 
question of" management since it relates to the utilization of lim.ited supplies. 
Partly, it is a problem of distribution of limited supples. 

In the recent reports of the Select Committee, attention was called to the 
direct association between absenteeism of woi'kers and overlong hours of work. 
In the most recent report of that Committee, there was shown to be correlation 
l[)etween declining productivity and exce'^sive hours in certain war industries. 
Especially was this true in the period following Dunkirk when the critical situa- 
tion stimulated a program of long hours of employment. 

Industrial welfare. 

The Ministry of Labor and National Service has divided its welfare program, 
administratively, into two sections, devoted respectively to welfare inside the 
factory and welfare outside the factory. War conditions have demonstrated 
that tiie ramifications of each type exists over a far wider field than had been 
generally realized before the war. 


In Britain (ai=! in the United States), personnel and welfare management has 
been increasingly recognized in recent years as a distinct function of manage- 
ment which is delegated to a special department. The foreman who once selected 
his own labor at the factory gates generally has been superseded in this function 
by the Personnel Management. The personnel manager is also often responsible 
for training new labor, for introdiicing employees to their work in the first vital 
weeks when labor turn-over is at its highest. Frequently, canteens, safety 
measures, and health of the workers are further responsibilities of the personnel 
and welfare department. The development of this managerial function is 
not by any means a new feature beginning with the war. However, under 
war conditions, growth of this practice in industry has enormously increased. 
Throughout the country there is a growing awareness of the need for adequate 
personnel management in all defense industries. 

The main new personnel problems concern women. Many women who are 
being brought into employment today have never worked in factories. Others are 
being transferred to strange jobs. Day nurseries are often the answer to the 
problem of mothers' helpers. Arrangements for part-time employment exist. 
War industrial companies frequently have adjusted the time schedule of their 
shifts to permit women to do their shopping. These are but a few of the 
questions that have stimulated the development of factory personnel and welfare 
departments in Britain since the war began. 

Welfare requirements on the Ministry of Labor (inside the factory). 

The Minister of Labor last year established the Factory Welfare Advisory 
Board to advise him on all questions of welfare inside and outside the factory. 
The Factory (canteens) Order, 1940, gave factory inspectors the power to direct 
that a canteen serving hot meals, be established wherever necessary in every 
factory employing more than 230 persons ; while still another order gave in- 
spectors the power to insist that whole or part-time medical care should be 
provided for factory workers. The Essential Work Orders have finally given 
the Minister a very definite stake in management since they state that before 
scheduling a factory under these orders, the Minister must be satisfied that 
there is adequate provision for welfare inside and outside the factory. Many 
factories without satisfactory provisions of this kind have been registered 
provisionally, but the pressure on employers to take action will now be very 
much stronger. 

Welfare outside the factory. 

Another section of the Ministry of Labor is concerned with conditions of the 
workers outside the factories. Special welfare officers have been appointed in 
every division of the Ministry to discharge this second function. They are 
intended to insure that : 

(a) Transferred workers have a proper place in which to live; 

(ft) They have adequate means of obtaining food, particularly those workers 
who cannot obtain meals at home or at lodgings or in the factory ; 

(e) There are facilities for recreation and adult education; 

(d) Provision is made for the young children of mothers who are working in 
the factory ; 

(e) Adequate transport facilities are available; 

(f) The health of the workers is safeguarded. 

How this formidable list of duties has been carried out could be learned 
only by intensive study. Undoubtedly performance varies from place to place. 
There are certainly not a sufficient number of trained welfare officers to insure 
that these provisions are fully complied with. The fact remains, however, 
that they are recognized as problems and they are stipulations of the Ministry 
which is responsible for the entire manpower supply. There is no doubt in 
my opinion that these functions are among the most important having to do 
with the operation of the production machinery in Britain under war condi- 
tions, bombing, black-out, evacuation of children, etc. 


In many of the new defense industry areas, there is a housing shortage. It 
is difficult to spare labor and materials for house construction today but in 
some cases it has been absolutely necessary to build houses in these districts. 
In other instances, householders have been prevented by the government from 
letting rooms without the permission of the local billeting officers. In some 
instances, hostels have been built for migrant workers. A "National Service 



Hostels Corporation, Limited" was established in the spring of 1940 to take 
control of such hostels. The biggest hostels have been set up near the new 
government munitions factories. Housing problems are severest near these 
factories for the reason that they have been located for strategic reasons, in 
the most out-of-the-way places. 

Agricultural lahor. 

The Agricultural Wage Board recommended to the counties the adoption of an 
agricultural minimum wage which has been accepted by all of the counties, I 
believe, with the exception of Cornwall, where it was decided that no change was 
warranted. The minimum wage so established is 48 shillings a week. The prob- 
lem in England has been not only to hold the present acreage in cultivation but 
to increase the acreage, thus resulting in an increase in the number of agricul- 
tural laborers required. The latter supply has largely been met by such devices 
as the Woman's Land Army, organized under the auspices of the Ministry of 
Agriculture, by means of which women from the towns and cities are enlisted for 
service on the land. It will be noted that under present British conditions, there 
is less tendency for normal agricultural labor to migrate to the cities than might 
normally be the case. Because of the fact that industrial cities are the chief 
targets of enemy air attack, because of housing shortage, conditions under the 
black-out, etc., the higher wages of the city offer less attraction than in ordinary 
times. -J 

The number one defense requirement — the health and welfare of the people. 

Among the vivid impressions which this witness received in Britain during 
the past year none is more indelibly fixed than this ; namely, that the strengthen- 
ing of health and welfare measures ranks with the building of guns, tanks, and 
planes as a defense priority. Under the circumstances, the health of the British 
people is being maintained beyond all expectations. The supplies of animal 
proteins, fats, and sugar have greatly deei^ened the concern of the government 
with problems of nutrition and the maintenance of nutritious food for all groups 
of the population. Yet there is as yet no evidence that any serious effects have 
been visited on any substantial number of the people by virtue of food shortages. 
However, if these ill effects have been avoided, this has been brought about only 
by prodigious effort on the part of all concerned and in the face of a food-distribu- 
tion system geared to the pre-war conditions of surplus supplies which could 
tolerate a greater degree of waste and inefficiency. 

The principal exceptions to the major (favorable) trend are to be found in 
the fairly significant insrease in the incidence of tuberculosis and, during last 
winter, of nose, throat, and chest diseases, and certain of the communicable 
children's diseases. The Ministry of Health ascribes the increase of tuberculosis 
to overlong hours of work and to the increased amount of factory work done by 
women. Conditions of overcrowding, resulting from the destruction of housing, 
transfer of war workers, etc., contribute to this undesirable trend. While the 
increase in incidence of the above types of illness was in some instances quite 
large, relatively, still the absolute increase was in no case large, considering all the 

The witness can merely sunnnarize here the following measures which have 
been taken to strengthen and expand the health and welfare measures particularly 
during the last year. Few, if any, voices of England are raised today to complain 
that these are nondefense expenditures. Sometimes one wonders whether, in 
this as in other matters, it is necessary for the bombs to fall in order that a nation 
may learn. 

II. A Brief Outline of the Changes in Social Security Provisions 


Under the provisions of the Prevention and Relief of Distress Act, a war 
n)easure, the Assistance Board, which formerly administered Unemployment 
Assistance, is now enabled to give financial assistance to any person or family 
which suffers a loss of income due to war causes, provided that the actual present 
income of the person falls below certain levels. The means test which is thus 
required is somewhat less rigid and the scale of grants somewhat higher than 
the Unemployment Assistance scale of assistance payments. Thus, if an indi- 
vidual loses his income due to war reasons, e. g., the closing of a small shop, 
professional office or other such case, aid can be received under the provisions 


of the Prevention and Relief of Distress provisions. Prevention and Relief of 
Distress grants are financed 100 percent from the national excheqner. 

Old-ar/e Supplementary Insurance Act passed in 1940. 

Under this Act the Assistance Board may, subject to a means test, supplement 
the Old-Age contributory pensioner's income, if such pension (which the pen- 
sioner receives of right) is not adequate. Thus the pensioner is relieved of the 
necessity of apiilying to the local Public Assistance Committee for poor relief. 

CivUian injury assistance. 

If a civilian is injured by enemy action, the Assistance Board will grant the 
injured person assistance under a stipulated scale which is somewhat higher 
than the ordinary assistance rates. This form of assistance is given without any 
means test whatsoever. If the disability from such injury continues beyond 
three months, the person is entitled to a pension, temporary or permanent, 
depending upon the nature of the medical findings. 

War-damage insurance. 

All real property in the United Kingdom is covered by compulsory war-damage 
insurance with respect to which premiums are paid on the progressive income-tax 
principle. Under the War Damage Act. chattels also may be insured against war 
damage at the option of the owner within certain maximum limits. While com- 
pensation under this Act is contemplated to be adjusted at the end of the war, 
the Assistance Board is empowered to make immediate grants for household goods, 
chattels, workers' tools, etc., necessary to reestablish the family in satisfactory 
conditions for the duration of the war. 

Increased benefits. 

Under the National Unemployment and Health Insurance Acts, benefits have 
been increased to meet the increased cost of living. Similarly Public Assistance 
scales in all categories have been increased. At the same time, payments of the 
worker and the employer to the Unemployment Insurance Fund have been slightly 
increased. The latter increase is not because of actuarial requirements, but, 
rather, as a part of the program of increased taxation and savings as an anti- 
inflationary measure. Actually the debt of the Unemployment Insurance Fund, 
which stood at £95,000,000 at the beginning of the war, has been extinguished 
and the reserve of the fiuid is now increasing at the rate of approximately 
£50,000,000 a year. The purpose is to meet the probably increased demand upon 
the fund at the end of the war. 


The coverage of Unemployment and Health Insurance has been extended to 
cover nonmanual workers receiving salaries of £420 per year and less. Since agri- 
cultural labor is covered under special plans, this means that the overwhelming 
majority of all workers in the United Kingdom are now covered by the National 
Unemployment and Health Insurance plans. 

Old-age contributory and supplementary old-age insurance. 

Under both of these categories the age at which women are eligible for benefits 
was in the early part of 1941 lowered by Act of Parliament from age 65 to age 60. 

British restaurants and factory canteens. 

Because of the transfer of war workers, the separation of workers from their 
families and food rationing, etc., the Ministry of Food is encouraging all local 
authorities to open British Restaurants ; that is to say, public restaurants which 
usually sei've a hot midday meal. In some instances the restaurants serve also 
a morning and evening meal. Here anyone may buy a meal at prices which range 
from about 8 pence to a shilling. For those who cannot afford to pay, the local 
authorities will provide free tickets. These are operated directly by the Local 
Authorities under the supervision of the Ministry of Food. As of August, ap- 
proximately 1,200 of these restaurants were in operation, something over 20O in 
London alone. The requirements of tlie Ministry of Labour concerning factory 
canteens have been previously described. 

Day nurseries and nursery schools. 

The Ministry of Health is encouraging local authorities to extend the facilities 
of day nurseries and nursery schools to meet the problems of children and work- 
ing mothers. In addition to the voluntary agencies of this kind which had 
already been in operation, some 300 have been established by local authorities 
under the general supervision of the Ministry of Health. 



Medical care. 

The Emergency Medical Service, which was originally planned to act as a 
casualty service for civilians injured by enemy action, is a National scheme based 
regionally upon the public and voluntary hospitals and utilizing some 5,000 physi- 
cians and a large nursing reserve. The physicians serve either i)art or lull time, 
arrangements varying with the local situation. Gradually, the coverage of the 
Emergency Medical Scheme has been extended to cover such categories as un- 
accompanied (evacuated) children, who are treated free of charge. The extended 
coverage of the Emergency INIedical Scheme now covers some ten categories of 
persons, such as evacuated mothers and children, transferred war workers, etc. 
Generally, persons in the latter-mentioned categories are expected to make some 
payment,' according to means. It is, however, the basic purpose of the Ministry 
of Health to provide, through this scheme, medical service as required, irrespec- 
tive of means. 

III. Labor Policy and Administeative MBrHoo 

Because of the various restrictive measures such as the Essential Work Order 
and the National Arbitration Order, many persons in the United States tend to 
think of British labor as being virtually conscripted under war conditions, because 
of the restrictions that tend to prevent workers from moving from place to place 
and from job to job. 

In Great Britain today the general tendency is to complain that not enough 
compulsion is applied. Critics include not only the Conservatives but also many 
Labor Pai-ty adherents M'ho visualize the more complete rationalization of man- 
power for all-out defense purposes. 

Actually the Government has not taken advantage of these most extensive 
powers of compulsion, but has rather relied upon persuasion and the extensive 
machinery of consultation which exists in Great Britain as between Trade Unions 
and employers' associations rather than upon compulsion. 

The basic power over labor is contained in No. 58-a of the Defense Regulations 
under which the "Ministry af Labour and National Service * * * may direct 
any person in the United Kingdom to perform such services in the United King- 
(joj^ * « * fjg jjjf^y ijg specified by the direction * * *." 

This power is implemented by the National Arbitration Order, the purpose of 
wliich is to eliminate strikes and lock-outs. The Essential Work (General Pro- 
visions) Order, and the specific orders which have been issued under this, together 
constitute the central support of the system. It is to be noted that compulsion 
under these orders operates both as to employers and employees and enforces 
upon the employer standards of "guaranteed wages," working conditions, welfare 
conditions, bargaining rights, etc. 

A« of July 2f). 1!)41, the provision of the Essential Works Order had been applied 
to 11,086 establishments employing 3,696,000 workers, and the process is being 
activelv extended. In this, as in other aspects of the Government's labor policy, 
it is tiie clear intent of the government to provide protection and guarantee 
advantages to the workers to whom compulsion is applied. 


It is the job of the local Labor Supply Inspector attached to the local Labor 
Excliange to be combing out continually the supply of skilled labor from certain 
factories in order to spread the supply more evenly according to the needs. 

In one notable the Ministry of Labour's representative negotiated arrange- 
ments under which a large firm in an industry, relatively unessential in the defense 
program, agreed to release nearly 1,600 young women in order to permit their em- 
ployment in nearby defense industries. The terms, wliich were successfully con- 
trived to make the transfer as easy as possible, are indicated in the dotnmient 
below, which was substantially that posted in the factory. It should be added that 
representatives of the Trade Union, as well as of the Ministry and the employer, 
joined in explaining the arrangement to the workers at a meeting in the workers' 


"As a war measure production in these works is being reduced. The chief 
reason for this is to release workers, especially young women, for urgent and 
vital work at Government Factories, etc. 

"In response to an urgent request from the Ministry of Labour, it has been 
decided to release from these works all female employees aged 20 to 24 years, 


"Please accept this letter as formal notice to terminate your employment on 
Friday the 1st of August, 1941. 

"The Ministry of Labour have suitable vacancies at the following Royal Ord- 
nance factories on work of the highest national importance. 

(Here a number of specific Royal Ordnance Factories were listed.) 

"Representatives of the Ministry of Labour and the Factories and Medical 
Officers will shortly attend this factory for the purpose of interviews and ar- 
ranging medical examinations. 

"Full particulars regarding hours, wages and conditions of labour will be 
furnished at those interviews. 

"Those employees who cannot be absorbed immediately should remain at their 
present occupation until notified. 

"It is with some reluctance that this notice is being issued, particularly as 
many of the employees concerned have been here since leaving school, dut the 
National need is urgent and imperative, and it is the duty of those who are 
able to provide those in the front Lne with the necessary munitions of war. 

When the National emergency ceases the Management hopes to be in a position 
to welcome back to their present position all those loyal and patriotic employees 
who have responded to their country's call in the hour of need. 

"The Management desires to express appreciation for loyal services rendered 
and to wish you well in your new sphere of activity." 

In these transfers and in the recruiting of labor, the official policy of the 
Ministry has been based on the dictum that, in industry at least, a volunteer 
is worth more than a conscript. "Directions" under the Defense Regulations 
have been issued only in a relatively small number of cases and there have 
been so far only 32 prosecutions (29 of them successful) for refusals to obey 
these instructions. 


The real implements in the field of industrial disputes are conciliation and per- 
suasion, compulsion being used only as a last resort. The National Arbitration 
Order of July 18, 1940, definitely prohibited strikes and lock-outs, provided only 
that the Ministry of Labour and National Service does not refer the disputes to 
the prescribed agencies for settlement. 

Two important points should be underlined with respect to the ta-king of these 
powers. In the first place, before promulgating this order, the Minister of Labour 
referred the proposed terms of the order to the Joint Consultative Committee of 
the Ministry of Labour, representing the Trades Union Congress and the British 
Employers Confederation. The Order was issued only with the consent of this 
Committee and the organizations which it represented. In effect, therefore, it 
represented an agreed declaration against industrial disputes on the part of 
organized workers and organized industry. 

In the second place, as in every Government measure which has been adopted 
and which has placd compulsion on -labor, the Order itself contains provisions 
definitely favorable to labor. 

Thus in industries in which there are collective agreements arrived at by 
"organizations of employers, trade-unions, representatives respectively of sub- 
stantial proportions of the employers and workers engaged," other employers in 
such industries must observe terms and conditions of employment not less favor- 
able than those embodied in these agreements. 

The same Order also includes the regulations requiring an employer to record 
departures from existing trade practices with respect to the employment of the 
particular types of labor. 

Generally speaking, it has been the practice not to use the compulsory powers 
under this and other orders vesting powers of compulsion in the Government. Of 
course, they remain as a threat lying in the background. 

In conversations which this observer held with employers, trade-union officials, 
and the Conciliation Officers in the Ministry of Labour, it was repeatedly empha- 
sized that there is a strong ui'ge on the part of all concerned to use the' pre-war 
machinery of consultation and conciliation and to refrain from recourse to com- 
pulsory powers excepting as a last resort. Tlie relatively small number of 
cases coming before the National Arbitration Tribunal is the best evidence that 
this is true. 



One of the most notable features of Britisli industrial policy during the 
war is the direct representation in many branches of the war effort of repre- 
sentatives of the Trade Unions and of the Employers. There is little abstract 
discussion of such general terms as "functional representation" and the actual 
Instances of consultation have often grown up in as ad hoc and British a 
manner as the evolution within certain establishments, from air-raid spotters 
representing the men, to parties for repairing immediate damage and finally 
to local production committees. Nevertheless, the encouragement of repre- 
• sentation is a recognized Government policy and is sometimes attacked as 
such by critics of the Government. 

The joint bodies of greatest significance for the war effort are the following: 

1. The Joint Consultative Committee to the Minister of Labor, consisting 
of seven representatives of the Trades Union Congress and seven representa- 
tives of the British Employers Confederation ; 

2. The Central Joint Advisory Committee to the Production Executive, con- 
sisting of twelve representatives of the Trades Union Congress and twelve 
representatives of Employers, of whom six are chosen by the British EmiDloyers 
Confederation and six by the Federation of British Industries. 

3. The Regional Boards of the Production Executive, each of which consists 
of three Trade Union representatives and three Employers representatives, in 
addition to the representatives of various Government Departments. The 
Chairman and Vice-Chairman of these Boards are named from the Employers 
and Workers Panels. 

In addition, there are representatives appointed by the General Council of 
the Trades Union Congress on the following bodies : 

(a) All the Industrial Controls of the Ministry of Supply; 

(h) The Industrial and Export Council of the Board of Trade (concerned 
with the concentration of industry and other questions) ; 

(f) The Committee on Retail Trade of the Board of Trade; 

(d) The Central and Area Prices Regulation Committees; 

(e) The Trades Union Council Advisory Committee to the Ministry of 

The Trades Union Congress has also accredited representatives to each 
of the 12 Regional Commissioners for Civil Defense. Trades Councils in the 
various localities are also asked to nominate a "consumer representative" on 
each of the Retail Coal Prices Advisory Committees and they are also repre- 
sented on local Food Control Committees. A more complete list of representa- 
tive agencies will be included in a report on "Methods of Collaboration" which 
has been prepared by the International Labor Office for that organization's 
1941 Conference. 

In these various bodies the effectiveness, type and purpose of activity vary 
widely. I have not attempted to consider the cases in which the Trade 
Union members are expected to represent the general or working-class con- 
sumer. On the bodies directly concerned with industrial questions, the major 
function of such representation has been to secure in advance the under- 
standing and acquiescence of the representatives of the interests that were 
to be affected by Government action and, therefore, to secure their help in 
extending and defending these measures before their constituents. Thus, the 
texts of the important regulations affecting labor, including the Essential 
Work Order, and the National Arbitration Order, were worked out in agree- 
ment with the Joint Consultative Committee, were amended where necessary 
to meet the interests of the parties, and were not promulgated until such 
agreement was secured. 

Since this practice of considtation has evolved gradually over a period of years 
only to be increased at greater breadth and implemented by official action during 
the war, it is often thought that all parties concerned have come to regard it as 
the essence of cooperative action between employers' and employees' organizations. 
From many quarters have come criticisms of this practice of consultation, some 
of the critics arguing that it confuses administration with policy making; that it 
causes untlue delay ; that it decreases the vigor of the war effort by providing 
openings for logrolling and delaying activities. The practice has probably mili- 
tated against the development of any national policy on wages and hours, .which 
has been referred to earlier above, with consequent effect upon the mobility of 
labor as between essential war industries. 



Impartial observers in Britain during tliis period seem to be generally agreed 
that by and large the Bi'itisli Government's labor policy has been reasonably 
successful. In July of 1941 the records of the Ministry of Labour indicate the 
smallest number of man-days lost for any month on the record. Conversely, the 
month of July was probably the largest month of production in terms of man- 
days worked. One day during early August 1941 diiring a discussion of this 
matter with the Chief Conciliation Officer of the Ministry of Labour, he advised 
me that as of nine o'clock of that particular morning not a single industrial 
dispute in the United Kingdom was known to the Ministry of Labour. I spent 
a considerable amount of time in a particular district which has always been 
one of the traditional centers of unrest in Great Britain. While there I learned 
of a number of hotly disputed matters as between employers and labor. Yet, 
withal, there was a decidedly favorable contrast when present attitudes were 
compared with the attitude of both employers and employees which I observed in 
this same region during the past war. 

Disputed questions included such points as dilution and upgrading of labor 
and the introduction of large numbers of women into industry, payments of wages, 
weekly wages to dock workers, piece rates, and overtime absenteeism. All of these 
questions are continually debated pro and con throughout the country. Despite 
this fact, the absence of unrest is marked. In general, observers appear to agree 
that the extent to which the Government has encouraged consultation and persua- 
sion and refrained from the use of its powers of compulsion are factors of the 
utmost importance. To what extent the presence of labor leaders, such as Bevin, 
in the Government since May of 1940 has been a factor cannot be appraised in any 
exact way. Probably underlying it all is the fact that British labor by and large 
considers this war as much its own battle as do the employers. 

IV. The Labor Exchange 

In connection with any discussion of the mobilization of manpower in Britain 
there is one device which deserves special mention, and that is the Labor Exchange. 
Several hundred Labor Exchanges and their branches are scattered about the 
country in strategic and convenient locations. Practically speaking, the Labor 
Exchange is the equivalent of our public employment office. 


In past years when unemployment was a big factor the worker had established 
the habit of going to the Exchange concerning his Unemployment benefits and to 
seek reemployment. When he wished to make a complaint against a ruling of 
the officials of the Exchange concerning his Unemployment Insurance Benefits, 
he could and did frequently appeal to the local Appeals Committee. This Appeals 
Committee consisted of one person representing the workers and one person repre- 
senting the employers, together with an impartial chairman. The employer's 
and worker's representatives were each selected from a panel and they served 
voluntarily on appeal committees in rotation. The Chairman, usually a lawyer, 
a political scientist, or some other professional person, was employed by the 
Ministry of Labor and National Service and paid a fee for his service. 

The machinery for appeals thus established in 1912 when the national Un- 
employment Insurance Act was first pas.sed, has remained substantially un- 
changed in fonn and method. In the course of time, the members of these 
committees have acquired skill and experience in dealing with the wide variety 
of human problems that come before them. 

Under war conditions these same appeal committees called by different 
names have formed the basis for practically every type of appeal by individual 
workers arising from the various national service regulations. 

For example, take John Jones who has been called up for the military 
service and wi.shes to appeal for deferment of his .service on the basis of 
unusual hardship. The Hardship Committee, on its own responsibility, may ap- 
prove the deferment, providing the Committee is satisfied that the applicant has a 

Or perhaps Mary Jones has been requested by the local authority to comply 
with the compulsory fire watching order, which will obligate her to take 
her turn watching for fire bombs in her neighborhood of a target city. Mary 
Jones claims that compliance with this order would cause undue hardship. 
The Committee will decide Mary Jones' case. If she claims physical disability, 
60396 — il— pt. 20 11 


the Committee may order a medical examination and be guided by the Doctor's 


Henry Smith claims that an order issued under the Essential Work Order 
which restricts him from leaving an essential war industry will work a 
hardship on him. Again the Committee will decide the case on its merits. 

The same procedure can be followed in other types of appeal by Individuals 
from the orders which sometimes severely restrict their movements from one 
place of employment to another. The decision on each appeal is within the 
discretion of the Appeal Committees, subject, of course, to the general regula- 
tions of the Ministry of Labor. 

The best evidence of the general success of this plan, which so vitally affects 
the British working people, is the fact that one hears so little discussion about 
the appeal machinery. Most striking fact of all is that the appeal machinery 
is so taken for granted that it hardly ever makes the news. 

All of these and many other types of contract have given the workers in 
Bri.ain a new and vital association with their local Labor Exchanges. 

Closely related to the Labor Exchanges are the conciliation services of the 
Ministry of Labor and the factory inspectors. While the latter services are 
not actually located in the Exchange, they are all coordinated by an offlcer who 
is one of the 12 Regional Controllers of the Ministry of Labor. 

At the center in London, the Minister of Labor is, significantly, Chairman 
of the Production Executive of the Cabinet which consists of the Ministers 
of the Supply Departments of the Army, Navy, and Air Force. 

Thus, at the national level, questions of major policy affecting the com- 
peting labor requirements of the Ministries responsible for war production 
machinery and the military services have created constantly changing labor 
priority problems. From each of these spring an infinite number of problems 
which affect the well-being of individual workers. 

Learning the lesson of the last war, the British concentrated in the Ministry 
of Labor practically all problems dealing with the recruitment, training, and 
distribution of workers among essential war industries, together with the 
new industrial welfare services. The need for many of these industrial wel- 
fare services has always existed but now that need has been sharply em- 
phasized l)y war conditions. The Labor Exchange has become the tangible link 
between the individual worker and the machinery for organizing the war effort. 


Employers, too, come to the Exchange. Employers in most of the essential 
war industries are reqiiirecl hy Imo to notify the Exchange of their labor 
requirements. Inspectors from the local Labor Supply Committee, which is 
closely related to the Exchange, determine whether specific plants and factories 
are using skilled labor efficiently. The inspector, an engineer, will advise on 
production adjustments to effect economies in the use of skilled labor. 

Among his other statutory powers, the Minister of Labor is empowered to 
remove skilled labor from a plant where it is being inefficiently utilized. 

The employer possibly also serves on one of the Committee panels. Thus, the 
Labor Exchange has become a meeting ground locally for the representatives of 
employers, workers, and the Government. There are, of course, many elements 
of all of this that are not functioning smoothly. But these arise mainly from 
the human shortcomings inevitable in the face of new and vast administrative 
problems. Obstacles arise also from the terrific friction that is created by the 
increasing dislocation of the leisurely peacetime organization for the production 
and distribution of goods. 

The fact that the British Unemployment Insurance and Public Employment 
Offices — that is to .say, the Labor Exchanges— are a part of a national system 
within the Ministry "^of Labor and National Service seems to be one of the 
greatest elements of strength in the British .situation. 

Thus, the operation of the Labor Exchange can be geared to the necessarily 
rapid changes in manpower policy of the Government, subject, as they are, to 
the swift change of events. For, in the final analysis, the Minister of Labor and 
National Service is responsible for the supply of man and woman power. 

To sum up a few of the more important functions of the British Labour 
Exchange then it is responsible for the — 

(a) registration of the Nation's man and woman power. 

(6) distribution of workers to the armed forces and to defense industries. 

(c) administration of hardship and other appeals. 

id) recruitment of workers for industrial training schemes. 


(e) administration of the Labor Supply Scheme. 

(f) payment of travelling, lodging, and other allowances for transferred war 

The supervision of industrial welfare work inside and outside the factory. 

Ail of these and other responsibilities have been concentrated around the 
Labor Exchange by the Ministry of Labor and National Service. Thus does the 
Ministry bring its* message to every corner of the country, the better to carry 
out its enormous responsibility for the mobilization of Britain's man and woman 


Mr. BiDDLE. If any questions are raised here that I am not able to 
answer for the record at the present time, I will make note of them 
and supply the committee with the information, which I am sure I 
have available. 

I have been in England the good part of the last year, particularly 
the last 6 months, returning in September. I should say that the Brit- 
ish problem of labor supply might be divided into three divisions — 
and I think this will bear on the question and probably on all the 
other questions that might be asked : 

First, of mobilizing several million men for the armed forces and for 
civilian production and military production. 

Second, the recruitment from among the unemployed of a large body 
of workers to carry on civilian and military production for the armed 
forces' needs. 

Third, the question of raising to the maximum of efficiency all the 
workers on their jobs. 

The significance of this threefold division is that there is one agency 
of government which is responsible for all three of these phases. That 
is the Ministry of Labor and National Service, which has vested in it 
approximately the same functions as those which are vested in the 
Office of Production Management, Labor Supply Division, the Labor 
Department, Selective Service Board to a large extent, and the Na- 
tional Labor Relations Board, as well as the Employment Security 
Division of the Social Security Board ; so that the Ministry of Labor 
envisages the entire problem of labor supply, and it is interesting to 
note the way in which it has developed along with that the concept 
of its responsibility for welfare provisions inside and outside the fac- 
tory. A good many of these relate to this question of transfer of labor. 
As you know, sir, British labor is a good deal more immobile than 
American labor. It doesn't move about the country in the same way. 

The Chairman. It hasn't the room either. 

Mr. BiDDLE. That is right. So that a somewhat different problem is 
involved in the transferring of labor in Britain, because of both geog- 
raphy and habits. 

The Chairman. When England started to do what we are doing 
now — shift from nondefense to defense — unemployment increased, 
didn't it ? 

Mr. BiDDLE. The number of unemployed registered in the national 
labor exchanges in June 1939 was about 1,300,000. You will remember 
that England had started the phase of activity that would correspond 
to our defense preparations after Munich. The period up to that point 
would hardly be significant, therefore, from the standpoint of trans- 
fers from nondefense to defense employment. 



It is interesting to note, however, that the unemployment figure in 
England remained up in that range even after Munich, for a number 
of months, and as late as April of 1940 there were still some 840,000 on 
the live registers of the employment exchanges. Those were people in- 
sured under the Unemployment Insurance Act. That is the only way 
they have of measuring it in any positive terms. During the early 
part of that period exactly the same things were happening as are 
happening here now : Nonessential industries were closing down. 

From that time to last spring the situation changed very rapidly, 
and in July of this year were some 219,000 unemployed registered on 
the live registers. That is probably an irreducible minitnum. 

The Chairman. We have about three times the population of Eng- 
land. So if you had a million unemployed there in England, that 
would correspond on a population basis to about 3,000.000 here, 
wouldn't it? 

Mr. BroDUE. Well, 1,300,000 on the live registers wouldn't mean quite 
that, sir, because the Ministry of Labor figiu'es are only good as to 
those in insured occupations ; so that 1,300,000 would possibly give you 
something under 5,000,000 correspondingly in the United States. In 
addition to that, probably some 30 to 40 percent of the workers are not 
covered by unemployment insurance, so those figures would not corre- 
spond to our gross estimated figures. 

The Chairman. It was testified this morning, Mr. Biddle, that ap- 
proximately 5,000,000 people are now registered with public -employ- 
ment agencies in the United States.^ 

Mr. Biddle. In those terms the figure wouldn't be very different 
from the pre-war British figure. The significant thing about the way 
in which this unified responsibility for the labor supply, for manpower 
supply, is expressed in the Ministry of Labor is its focus on the local 
employment exchange, which is the rough equivalent of our public 
employment offices. 

Practically every contact which the worker has with war industry 
is at the labor exchange. Before the w^ar he went there, just as he does 
in our exchanges, for unemployment compensation benefits ; and if he 
were employed, he was covered by unemployment insurance. He went 
there twice a week perhaps to see whether there was a job available. 
So that he had that basis of operation at the outset ; but shortly after 
the beginning of the war, when the Labor Ministry was made the 
Ministry of Labor and National Service and expanded its functions 
very rapidly overnight, that agency became responsible for registering 
men for the armed forces at the labor exchanges. Thus it became 
responsible for the registration of all men and women for any kind of 
industrial employment in connection with the war. At that juncture 
the labor exchange became the focus of the entire labor supply locally. 
The Chairman. We have heard about the employment agencies all 
over the country, about getting these lists and keeping them active, 
but I think it should be remembered that we are dealing with 48 States ; 
and England's problem is one thing and our problem is entirely dif- 
ferent. They have a central agency there to take care of employment 
problems. Here we have 48 State agencies and some Federal agencies. 
I always think of England in terms of a State smaller geographically 
than Oregon, and I think we have to keep that in mind. 

See p. 8128. 


Mr. BiDDLE. It is not impossible though, sir, that there would be a 
national system here. It was contemplated, at the time the Unemploy- 
ment Act was passed, that there might be a national system of unem- 
ployment offices, and one has seen it mentioned a number of times since 
then, more recently within the last few weeks. I would certainly 
emphasize that I am not urging any program here. I am simply point- 
ing out, as far as I have been able to observe them from the British 
experience, things that might be useful to us. 

The Chairman. What about migration from one pai't of the country 
to another ? Has it been great or small ? 

Mr. BiDDLE. It has been tremendous. There has been a tremendous 
movement from place to place for a number of reasons. New war 
industries have been located in the valleys of Wales, in accordance 
with the dispersal policy of getting factories in less vulnerable areas. 
The bombing of industrial cities and the evacuation of children have 
also had effects on the industrial workers as well. So that there has 
been large movement of the population, and the dislocation resulting 
from that has been enormous. Particularly it has been true in the 
matter of transfer of the industrial workers, dock workers, and miners, 
and workers transferred from less essential to more essential war 
industries. All of that has led to movement. 


The Chairman. What about transportation ? Was it paid for ? 

Mr. BiDDLE. Yes. fThe procedure is something like this: At the 
center in London there is a clearinghouse for vacancies — labor require- 
ments, in other words — and notification of these is sent to the various 
regions and subsequently to the district offices of the labor exchanges. 

Let's take a case in point. The exchange in Leeds is notified of in- 
dustrial workers needed in Birmingham. We will assume that a cer- 
tain worker has lost his job because of a shut-down of an industry due 
to war conditions. At the labor exchange he will be interviewed. It 
looks as though he has the qualifications for the job in Birmingham. 
He agrees to accept the job. He is paid his fare to Birmingham. He 
is paid a wage of 5 shillings if the trip is less than 4 hours ; and if it is 
more than that, 10 shillings. 

The Chairman. Who pays that? 

Mr. BiDDLE. The Government. It is paid at the labor exchange. 
When the worker goes to Birmingham, he is met at the station by a 
representative of the exchange, who directs him to a billet which the 
welfare officers of the factory, outside of the labor exchanges, are re- 
sponsible for securing. Possibly it is a hostel, where he will stay over- 
night until he gets a permanent lodging. He reports to the exchange 
the following morning and is referred to his job. 

Now, if he has left his family behind him in Leeds, and wishes to 
maintain them there, he will be paid while he is in Birmingham 3 
shillings a night for maintenance allowance. That will be paid at the 
exchange — that is, in addition to his wage. On the other hand, he may 
wish to bring his family with him. He may have a house in Leeds, 
which he wants to retain. In that case he may receive a continuing lia- 
bility allowance, perhaps indefinitely, for an amount not exceeding 25 
night until he gets a permanent lodging. He reports to the exchange 
shillings a week. That is his alternative. He may get the mainte- 
nance allowance or the continuing-liability allowance, but not both. 


The Chairman. Mr. Biddle, it might interest you to know that we 
have in the United States 28 States making it a crime to transport a 
poor person across State lines.^ So we could probably learn something 
from England. 

Over there, if a home or an apartment is bombed, and the family 
loses its shelter and furniture, what is done for those people ? 

Mr. BmDLE. In the first place, those people will go to the Assistance 
Board, which was the national agency responsible before the war for 
providing unemployment assistance. The Assistance Board will, af tei 
an investigation of the case, make a decision of need, and will provide 
funds for establishing them, and also it will provide money to buy 
furniture and necessary househbld equipment at a new location. The 
local authority will secure a billet, or a number of billets, or it will 
provide a new house — that is, an unoccupied house — for the family. 
If they have an income from wages or otherwise, they go ahead and 
pay their rent. If they don't have, the money for that is made avail- 
able b}' the Assistance Board. All of that takes place probably within 
48 hours after the bombing incident occurs. 

The Chairman. Would you please, Mr. Biddle, outline briefly for 
the committee the main changes which have been made during the war 
period in such social-security legislation as unemployment compensa- 
tion, old-age benefits, and health insurance? 

Mr. Biddle. First, the unemployment and health insurance acts have 
both been amended to increase benefits and premium payments. The 
additional benefits amount to 3 shillings a week in both cases, and they 
represent increases to meet the cost of living. 

Both of these forms of insurance have also been increased in scope — 
that is to say, they cover a greater number of workers and groups that 
had not been covered before. 

In the field of old-age insurance, which is very similar to our 
old-age security benefits in its general terms, first of all a supple- 
mentary old-age insurance act was passed in 1940 which had the 
effect of almost doubling the benefits, which had been very inadequate. 
And in addition to that, it was also made a law early in the year 
that the age at which women would be entitled to receive benefits 
was reduced from 65 to 6'0. 

In the field of assistance the most significant changes have been 
made. Practically all forms of assistance have increased their rate 
scales to meet increased living costs. 

The former Unemployment Assistance Board (now called the As- 
sistance Board) is administering the supplementary old-age pensions 
on a means test and, in addition to that, is administering several new 
forms of assistance which have been adopted to meet war needs. 

The most significant change, from the standpoint of this country, 
would be the so-called Prevention and Relief of Distress Act. That 
is a provision whereby assistance can be made available by the As- 
sistance Board to anyone losing his income from practically any cause 
related to the war, on a less rigid means test than was used in unem- 
ployment assistance and at somewhat higher rates. 

Now, if a man were displaced from his employment because of 
war conditions he might not be covered by unemployment insurance. 

iQn Nov. 24, 1941. the United States Supreme Court handed down its decision in the 
case of Edwards v. The State of California, No. 17, October term, 1941, declaring that 
such laws are unconstitutionai barriers to interstate commerce. 


If he were not, he would be available for assistance under the pre- 
vention and relief of distress. The coverage is very wide, and it isi 
very widely interpreted by the board in administering it. 

The Assistance Board also investigates applications for civilian in- 
jury pensions and assistance for people injured by enemy action, and 
also for civilians who have lost their property. Such compensable 
claims are covered under the War Damages Act, which will operate to 
compensate claimants after the war, but pending that time they can 
have their immediate needs met by the Assistance Board, and such 
payments will serve as a credit to the war damages insurance, which 
is compulsory. The act covers all real property. 


The Chairman. Wliat about health? 

Mr. BiDDLE. In the field of health significant improvements have 
been made in the British organized services. For example, the Emer- 
gency Medical Service was started in 1939, just before the war. It 
originally provided for civilian casualties, persons injured in air 
raids; and an elaborate hospital service has been set up in the country 
to deal with that problem. After the war struck it was apparent that 
there were needs that had not been taken into account — transferred 
war workers, the mothers and children who were evacuated from tar- 
get cities, transferred civil servants, and various others. Practically 
all categories affected by the war situation are now eligible for treat- 
ment through the Emergency Medical Service, and if necessary for 
hospitalization, and they pay according to their means. 

Attention has been given to the nutrition of all classes and groups 
in the population, exceeding anything that had happened in Eng- 
land before the war. Public health measures generally have been 
strengthened, necessarily because of damages to cities, but also be- 
cause of all these i^roblems of war areas. 

The Chairman. Your latest figure on unemployment is something 
like 200,000? 

Mr. BiDDLE. The figure dropped to some 219,000 in July. 

The Chairman. Does the relief program take care of the unem- 

Mr. BiDDLE. That 219,000 are probably for the most part receiving 
Unemployment Insurance. Because they are on the live registers and 
because of the fact that unemployment doesn't last very long at this 
time, most of those workers are passing from one employment to an- 
other. Meanwhile they are probably receiving unemployment insur- 
ance. But as for the people not covered by unemployment insurance, 
they would receive aid from the Assistance Board, which is financed 
entirely fi'om national funds with the exception of the so-called 
imemployables, who would be receiving aid from the local unemploy- 
ment committee and from the local council. That last group tends to 
be static, and is about the same in war or peace. All groups not covered 
by insurance would receive aid from the Assistance Board, and it 
would be financed from the national funds. 

Mr. Sparkman. Mr. Biddle, I gather that most of these things 
you have been telling us about — these new benefits or additional 
benefits are limited to the period of war, rather than adopted as a 
permanent program. That is right, is it not ? 


Mr. BiDDLE. They have been enacted to meet conditions that have 
come out of the war. 

Mr. Sparkman. Is it your understanding that they will be con- 
tinued after the war, at least long enough to absorb the shock? 

Mr. BroouE. I should think so. In England they are thinking of 
most of these measures as continuing for the period of the emergency. 

Dr. Lamb. You treated earlier the question of the worker who, 
having a skill and having lost his job, was engaged to go to another 
city through the machinery set up for transportation. Suppose th3 
worker displaced does not have a skill in demand in war industry. 
What are the arrangements that are being made to retrain him? I 
suppose there is a considerable shortage of labor in England at the 
present time in many lines. What provisions in terms of wage com- 
pensation or assistance are made for him while he is in training? 

Mr. BrooLE. The Ministry of Labor and National Service is re- 
sponsible for the industrial training program. The worker will also 
probably be interviewed at the Labor Exchange and after a consider- 
ation of his skills and aptitudes generally, suggestions will be made 
to him, probably for a training course to be given either in one of 
the Government training centers or in industry under one of the 
Government training schemes. 

Dr. Lamb. Do they have multiplicity of training arrangements 
such as exist in this country at the present time, or is the training 
limited to those types which you have just named? 

Mr. BmDLE. The governmental training schemes will of course 
mean variations according to practice in the industry under consider- 
ation, but in any case, even in the varied nongovernmental training 
schemes, the training rates will apply one rate of compensation. 

If the trainee is in a government school he will receive a nominal 
wage plus a maintenance allowance for his wife and children, which 
is somewhat along the line of insurance compensation, although 
higher than the insurance compensation and lower than normal 
wages. If he is being trained in another city, he will receive board 
and lodging under this training scheme. Then if he goes to the non- 
governmental training schools, he will receive a wage paid by the 
employer in the case of industry, but at rates that have been agreed 
upon in the public schedule for the industry. 

Dr. Lamb. AVithout any contribution from the Government? 

Mr. BiDDLE. There is a contribution from the Government in the 
form of subsidies to employers for loss of time in the training process, 
and that sort of thing. Not in the form of direct wages. After the 
training process is completed, incidentally, the employee may not con- 
tinue in the same industry or same factory if he is trained in the 
Government school. He must go to another factory. 

Dr. Lamb. AVliat is the advantage to the employer for paying for 
training if he must go to another factory ? 

Mr. BroDLE. The advantage to the employer is that he gets the pro- 
tected-industry status. To become a protected industry is to enjoy 
the privilege of not having men called out. The employer must agree 
to this training program as a condition for becoming a member of the 
protected-industry group. 

Dr. Lamb. What is the object for which this special reservation was 
designed — that is, that the worker may not work in the factory where 
he has been trained ? 


Mr. BiDDLE. That is an agreement between the Cirir.'oyer and the 
trade-union. I can only assume it is to avoid the exploitation that 
sometimes comes up, and also the apprenticeship problem. 

Incidentally, that worker whom you mention would receive unem- 
ployment compensation during his period of unemployment and after 
that receive aid from the Assistance Board until entering the training. 
Before being accepted for training, he might have to stand by for 
two or three weeks. 

Dr. Lamb. Suppose he hadn't been placed? 

Mr. BiDDLE. He would be placed immediately or be covered by one 
of those agencies. 

Dr. Lamb. Would you say that there were any other significant dif- 
ferences in the British approach to the problem of training workers 
for defense industry? 

Mr. BiDDLE. No. I think the significant difference is the combining 
of these functions so that the Ministry of Labor envisages the entire 
problem of manpower by including industrial workers ancl men in the 
military forces. 

Dr. Lamb. Is it your opinion that this centralized arrangement, put- 
ting employment and unemployment and all of the related problems 
in the hands of the one Ministry of Labor and National Service, has 
worked out well? 

Mr. BiDDLE. I should say it is the prime strength of the British situ- 
ation at the present time. There are undoubtedly a good many 
weaknesses and points of friction still in the system, but they are 
largely a matter for adjustment. 

Dr. Lamb. A large part of this system has been developed within 
the past year, although superimposed upon a more extensive system 
of public assistance and social legislation that existed in that country. 
Is that correct? 

Mr. BiDDLE. Before the war the unemployment compensation ex- 
isted, of course. So did the employment office. 


Dr. Lamb. What about the problem of labor priorities as between 
industries, the problem of skills within those industries, and the needs 
for special types of workers ? How is that handled ? 

Mr. BiDDLE. I should say that that is probably one of the most diffi- 
cult spots in their entire problem. It is one of the causes, probably, for 
the demand from many quarters for a Ministry of Production. You 
may have seen something of the debates this summer in Parliament on 
that point. In the final analysis, the decision among those claims for 
priorities would probably rest in the Ministry of Labor. The asser- 
tion is often made publicly that the chairman of the production com- 
mittee doesn't exercise his authority in respect of priorities rigorously 
enough. I don't know what the merits of that allegation are. 

Dr. Lamb. The underlying problem has been discussed here this 
morning to some extent, of getting orders together with men, and the 
fact that two different agencies have these problems in hand. With 
the problem of labor supply before the Ministry of Labor, and with 
the problem of orders under another agency, are not complications 
likely to arise with respect to labor priorities ? 


Mr. BiDDJLE. I should say the problem will have complications in any 
event, but as between the two viewpoints, it would seem to me that the 
problem embraces the entire labor supply question — that is, defense and 
nondefense — with all of its implications of factory welfare, and so 
forth; and I think it is best solved by lodging all of the manpowei- 
responsibilities in a single agency wherever it lies. I am inclined to 
think this is so, even if it should involve a departmental separation of 
labor supply from production, although that is certainly a moot 

Dr. Lamb. Is there any special program for recruiting the resources 
of labor supply which are not ordinarily considered to be part of the 
Federal market — groups of women who are not usually employed and 
persons over a certain age who have skills which would require refresh- 
ing? What is the machinery for recruiting such groups for employ- 
ment ? 

Mr. BiDDLE. There has been a registration of women up to the agw 
of 25, and I think they are in the process of registering age classes up 
to 30. They are all being registered at the Labor Exchanges, inter- 
viewed there and referred to training. There is a good deal of this. 
It is done on a voluntary basis, but there is a good deal of public edu- 
cation going on, focused again through the labor exchanges and the 
public relations department of the Labor Ministry, to encourage women 
to go into industry. Again it revolves about the Labor Exchanges as 
far as actual recruitment is concerned. 

The Chairman. Thank you very much, Mr. Biddle. We appre- 
ciate your coming here. 

Miss Dublin. Mr. Chairman, I should like at this time to offer for 
the record a group of exhibits from sources not represented by wit- 

The Chairman. The exhibits will be made a part of the record. If 
there is nothing further, the committee will stand adjourned. 

(Whereupon, at 12 : 30 p. m., the committee adjourned, subject to the 
call of the chairman.) 


Exhibit 1. — Retraining and Transference in the Post- War 




The following memorandum is based upon two general assumptions: 

(1) That public responsibility for transference and training will exist in the 
post-war economy. It will exceed substantially the level of such responsibility 
before the emergency. 

(2) That in relation to the "unemployed in the labor market," training and 
transference will, in the post-war economy, be recognized as definite and integrated 
forms of social service. 

These assumptions do not mean that in the post-war period, no responsibility 
for return and transference will be left to industry, to unions and to the 
individual wage earner. The coordination of their activities and of public 
service in these fields would be an important aspect of the future problem. 

Public guidance of transference of workers — geographical translocation as 
well as industrial or occupational shifting — has, even during the present emer- 
gency, been less extended and active, than public guidance of training. 

Should the public attitude in the post-war period swing back to traditional 
individualism particularly strong resistance might develop against public inter- 
ference with the free choice of locality, occupation, and employer, even though 
such interference bore no formal compulsion. This resistance might be over- 
come by the urgent need for intervention. Public responsibility for training is 
backed by preemergency tradition — vocational schools, fostering of apprentice- 
ship — and should meet less opposition if it is coordinated with the training 
policies of industry and labor. 

We may conclude that the integration of training and transference into the 
social services for the unemployed will continue. 


Amount and character of the problems of transference, retraining in the 
post-war period will be defined by the following : 

1. The time when the war ends. 

2. The amount of dislocation — geographical, occupational, industrial — of the 
labor force. 

3. The general structure of the labor force at the time when the war ends^ 
age, sex, race, industry, occupation. 

4. The degree to which up-grading of workers and the dilution of jobs have 
been realized. 

5. The extent to which the transferred and the trained workers have taken 
root in their new localities and in their new jobs. 

6. The general character of the post-war economy (a) during first transitional 
periods (b) in its more definite structure. 

7. The level of employment and unemployment in the post-war time. 

8. The future policies of management and labor in relation to job classification, 
promotion of workers, apprenticeship, other forms of training, their polic'ts 
in regard to hiring and firing. 

9. The degree to which "rights on jobs" will have been established by \a\f 
or collective agreements. 



10. The development that social services, social-security programs, and institu- 
tions of vocational education have undergone during the present emergency. 

These are the most important specific considerations. But they may, for 
longer or shorter time, be overshadowed by general political developments — 
national as well as international. 


1. Time when the war ends is of fundamental importance for most of the 
other elements, particularly for those mentioned in Nos. 2, 3, 4, 5, 6, and 10. It 
is particularly important for — 

2. The amount of dislocation. The diversity of magnitudes for differently timed 
endings of war is expressed by the National Resources Planning Board estimates 
of a total labor force of 55.4 millions in 1942, and of 60.4 millions in 1944. In 
1942, 2.5 millions will be in military service, 11.7 millions in defense industries, 
and 41.2 millions in nondefense jobs, compared with 3.5 millions, 23.5 millions, 
and 33.0 millions for the same three groups in 1944. These figures should be com- 
pared with 0.4 millions in military service, 2 millions in defense industries, and 
45.2 million employed in other jobs in 1939. 

Of course, not all the defense workers of today, and of tomorrow, are, or will 
have been, dislocated. Many will work for defense in the same shops and even 
in the same jobs. But millions have, and will have, to migrate. And an even 
greater portion of the labor force has to shift to new employers, new industries 
and new occupations. A still greater portion endures some change in jobs or job 

3. The general structure of the labor force at the end of the war will reflect 
these various changes. Its age, race, and sex structure will be of great importance 
for transference and retraining. Some information about this structure is becom- 
ing available, particularly statistical through the employment services. But 
much broader information is, and will be, urgently needed. 

4. And 9, of paragraph II should be considered together. We may expect that 
up-grading of workers, and breaking down of jobs will reach much higher levels 
before this emergency ends. Whether these processes will be reversed in post- 
war time will be one of the primary problems of management and unions. 

Up-grading, as well as breaking down, jobs may in some cases increase the 
versatility of workers, and in this way be helpful for later transference and 
training. On the other hand, many of these workers will have very limited 
operative experience, particularly if they have gone through the typical "pre- 
employment refresher" courses or through other quick forms of emergency 
training. Quick, intensive, specialized training may become a handicap if the 
organization of operations is reversed in post war time. This reversal seems 
more probable than the continuation of the present job policies. 

5. Social and industrial stability of workers, and the establishment of rights 
on the job will have serious implications for transference and retraining. From 
the former may arise psychological resistance against renewed transference 
and retraining. Rights on the job on the other hand, particularly the right to 
return to preemergency jobs, would facilitate these processes. How far such 
rights will be realized depends very much upon — 

6. The general character of the post-war economy, especially its level of 
employment and unemployment. 

Under the assumption of an allied victory, the post-war economy should 
return to a better balance between its different branches. Some over-developed 
industries may survive in restricted form, others may be able to convert for 
peace-time production. Thus, some of the geographical, industrial, or occupa- 
tional dislocation, suffered by workers during the present emergency may not 
need correction by transference or training. But a very substantial portion of 
the 23.5 millions defense workers, estimated by the planning board for 1944, 
would definitely lose their war work opportunities and have to look for new 
ones. Transference and retraining after the war will depend upon the nature 
of the post-war economy. 

The planning board rightly in.sists that time will be needed to shift produc- 
tion and to shift workers. Only if the defense industries are liquidated sys- 
tematically and gradually will there be suflBcient time for planned transference 
of great numbers of workers. 

How much time will be necessary for the post-war economy to reach a phase 
of relative stability? What transitionary phases will be necessary? These 
questions are important for transference and retraining. Nothhig could be less 


desirable than transfer or training for temporary jobs or temporary places. It 
would be better to bridge the gap in time between the end of war and the 
growth of definite work opportunities by more extended ambitious training 
methods, than to give short, intensive training similar to that used in the 
present emergency. Apprenticeship in these trades where it is still economically 
justified should become much more predominant than it is today. Necessary 
as a program of public works will be in the transition period, these works 
should be organized and localized so that they do not demand new transference 
or training. Temporary maintenance of the worker, and his family will be 
better policy than hasty' transfei-ence or training for only temporary positions. 

Particularly helpful in transference and retraining will be — • 

7. The further development of social security programs, and social services. 
No greater step can be taken toward the realization of a definite program of 
transference and training in post-war time than the nationalization of unem- 
ployment compensation systems and the employment services. The coexistence 
of 51 separate compensation sys'tems that do not mutually recognize credits 
earned in other States will prove to be a great obstacle to the transference of 
workers across State borders. Interstate clearance by the employment ser- 
vices — a difficult technical problem in any case — has much greater prospects of 
success in a national employment service. 

Equally important is the liberalization and extension of unemployment com- 
pensation, as suggested by our committee, to give the worker the necessary 
breathing spell for substantial training and for well-considered translocation. 

Not less desirable is the intgration of public works and unemployment relief, 
with training programs, and with transference. 


The labor supply at the end of the war will consist of two main groups. Th© 
majority will be "regular" workers of. at least, average employability who de- 
pend upon work for their own and their families' living. There will, however, 
be a substantial minority of "additional" workers who have been drawn into the 
labor force by the shortage of regular labor but who might not be considered 
employable in periods of labor surplus, or who do not depend upon jobs for their 
existence, e. g., the numerous old people who are potential beneficiaries of age 
benefits or assistance, small farmers and shop owners, married women, etc. 

To this existing labor force will then be added the current afflux of new 
comers who again consist of two categories : the regular recruits of the labor 
market, particularly youth who do not go into higher education, and new groups 
of "additional" workers, who may be pushed into the labor market by unemploy- 
ment of the family breadwinner or other losses in family income. 

There will exist also in the labor force of post-war days the short-term move- 
ments that have been described by Howard Myers and others. 

The policy of transference, retraining and training will have to reconsider these 
different categories. It should concentrate upon the "regular" workers and the 
"regular" labor market recruit. It would be wrong to hold "additional" workers 
in the labor force, or to bring them into the market if these "additional" workers 
have no sound prospects of adequate employment, or do not need employment. 

This policy will be unusually delicate in Its application to the "additional" 
workers who have been in the labor force of the emergency period, have built up 
credits for unemployment benefits and may try to use these benefits as a bridge 
to training courses or transference actions. 

The first phase of the post-war period will see the return of the demobilized 
soldiers many of whom will have belonged to the "regular" labor force. It might 
seem easier to time and direct their return into work-life than any other group. 
Such planning and timing might, however, be seriously hampered by the popular 
pressure for fast demobilization. Many soldiers will need some retraining even 
if they return to their old jobs. It might be expected that this task will, in most 
cases," be dealt with by the employer. The demobilized soldiers should in any case 
be equipped with claims for unemployment benefits to give them the necessary 
maintenance during periods of transference and of out-industry training. 

In the care of the demobilized soldier, military and civilian services will have 
to cooperate. Particularly important will be cooperation between public employ- 
ment services and military authorities. 



The problems of transference are twofold : To oppose translocations that give 
no prospects of satisfactory earnings, and to organize and direct transferences 
that are economically and socially sound. 

These problems are inseparable. The stronger the means are by which trans- 
ference can be supported, the more might it be possible to hinder undesirable 
movements by refusing to use these means. 

An indispei'isable tool for such a policy would be a public fund from which loans 
or grants for costs of transport could be made. Such loans or grants should cover 
also the transport of family members and the temporary maintenance of the 
worker and his family under clearly defined statutory conditions. This fund 
should be an integral part of unemployment compensation. 

It might be possible to influence the process of translocation indirectly by some 
additional provisions in unemployment compensation, by authorization, for in- 
stance, to establish residence requirements for eligibility, or to define work in dis- 
tant localities or outside of the worker's experience as "suitable work," perhaps 
only in the transitory period and only in relation to extended benefits. 

Another important tool is the broadest possible information about the labor 
market, information usable by the labor-market expert, but also material that 
the individual worker can use in his decisions, like the farmer's use of the 
current reports of the Weather Bureau. 

A large portion of translocations will, in any case, go on through individual 
initiative and on the individual's risk, and the task of the employment services, 
and of other authority, will in these cases be limited to information, encourage 
ment. and warning. 

The employment service sliould, in its current information about prospects 
and trends of the labor market in post-war time, clo.^ely cooperate with the 
labor unions, particularly on the local level, and request their assistance in 
the policy of translocation. 

It is very fortunate for the public employment service that close contact 
with many emplovers has been established in the present emergency. But things 
will look very different in the post-war period. Many of these well-established 
contacts will vanish with the liquidation of defense industries. The position of 
the employment service will then, as before the emergency, depend upon its 
quality. Legal monopoly in placements, or legal compulsion to use the service, 
have only nuisance value if the service lacks in efficiency. 

The process of liquidation and transference might well go on for several years. 
Even after this process has been ended, and when the post-war economy takes 
s more definite shape, financial support of necessary translocations should exist 
as definite function of a system of unemployment compensation. 


Insofar as post-war retraining and training does not depend upon private 
initiative, it should be coordinated with vocational education and apprenticeship 
programs, on the one hand, and with the employment services on the other. 

The exploration of the labor market in its local and superlocal layers, the 
counseling of the applicant for training, the referral to the training institutions, 
or to industry as far as training is being carried out by industry itself, and the 
placement of the trained workers should remain in the domain of the employ- 
ment services. Their knowledge of the labor market should also be used in 
the definition of objectives and methods of training. An excellent pattei-n for 
such a cooperation has been established during the last months, and should not 
be lost again. Equally important as a pattern for future developments is the 
creation of advisory committees of management and labor with vocational educa- 
tion. It seems desirable to establish close contact between these committees and 
the advisory committees of the employment services. 

These suggestions have a much greater chance for realization in a national 
system than in 51 separate State employment services. The training program 
seems to be complicated by training work of the National Youth Administration. 
The same is true for training activities of other agencies such as C. C. C. and 
W. P. A. 

Insofar as training is handled by private industry there should be close coop- 
eration with public authorities in order to avoid duplication of efforts. But also 
labor has to be the third partner in this cooperation, because of its interest in 
amount and qualities of learners, trainees, and apprentices, and because of the 
influence it exercises by collective agreements. 


Three aspects of the post-war economy fundamentally different from the 
emergency period, should affect general training policies : 

(1) Its broad industrial diversification and broad geographical dispersion. 

(2) Its mere definite character. 

(3) The sharper distinction between skilled,) semiskilled, and nonskilled 
workers and jobs. 

Post-war objectives and methods of retraining and training should be funda- 
mentally different from present objectives and present methods. Training of the 
"preemployment refresher," one of the strongest elements in the present public- 
training program, will be very useful during the transitional period for demo- 
bilized soldiers and defense workers who return to their old jobs. Tlie same 
might be true for the "supplementary" courses. They might, however, lose in 
importance as far as "up-grading and breaking down of jobs" stops. 

There will always be the need for "vestibule" training, and this need will not 
be satisfied entirely by industry itself. The public responsibility for unemploy- 
ment compensation will push the authorities to use this method of training. 

Compared with the present program, much more emphasis should be given to 
extended vocational training and to apprenticeship. 

Today training necessarily is concentrated upon a limited number of industries 
and occupations, but its objectives will in the post-war period cover the whole 
gamut of economic activities, with special emphasis upon those that had to be 
neglected during the emergency, e. g., services of all sorts and agriculture. 

Post-war training should be formally recognized as a social service. It should 
be integrated into unemployment compensation, in the same way as in Britain 
and other countries. That means that, on the one hand, training would, under 
certain statutory rules, become a condition of eligibility, and, on the other liand, 
unemployment compensation could be used for the maintenance of the trainee and 
of his family. It might be advisable to provide additional funds in the compen- 
sation scheme for additional remuneration of the trainee, and for certain general 
expenses as far as these expenses cannot be taken over by vocational schools. 


(1) Transference and training, retraining as well as the training of the labor 
market recruits, should be included in post-war planning. Compared with public- 
work programs, transfei'ence and training require much sm.aller investments 
and they return the worker to a normal economic status. Of course, large 
post-war programs of public works will be indispensable but they must be 
coordinated with training and transference. 

(2) The program of retraining and transference cannot be definitely established 
before the definite amount and character of dislocation, resulting from the 
present war economy, is known. 

In addition a clearer picture of the post-war economy is needed. It is of 
uttermost importance to collect now and currently all available material on — 

(a) Amount and character of translocation of workers — geographical, indus- 
trial, occupational. 

(&) The structure of the labor supply, with special attention to the "addi- 
tional" elements in it. 

(c) The experience, that is now growing up, concerning methods and results 
of training courses. 

id) The changes in job requirements. 

(e) The establishment of rights on jobs. 

The excellent work of the Tolan committee on defense migration, in exploring 
the social situation of the translocated workers, will be of greatest help for 
the post-war plans. This work should be continued on the broadest possible 

A very important tool for retraining after the war would be created by the 
establishment of individual records that report the training experience of the 
emergency trainees. Such cards would have to be filled by the leader of 
the course, and then be kept in the files of the employment service, together with 
the trainee's application card. 

(3) Nationalization of employment services and unemployment compensation 
systems would be one of the most important steps toward efficient trans- 
ference and retraining in post-war time. Employment services need permanent 
support and attention to enter the post-war period on a higher level of 

The progress in labor market reporting should be intensified and extended. 
The question of current popular labor market reports asks for special study. 



(4) Transference and training sliould be integrated with unemployment 
compensation as definite forms of social service. There should be provided, 
in integration with the compensation scheme: 

(a) Grants and loans for costs of translocation. 

(6) Maintenance of the trainee and his family during the trammg. 

(c) Funds for additional expenses of trainees, and in special cases, for the 
costs of training courses. 

id) Authorization to establish certain residence requirements and trainmg 
requirements as conditions of eligibility. 

(5) Cooperation should be established — 

(a) Between military and civilian authorities for preparing and operating 
the transference and, if necessary, retraining of the demobilized solders. 

(6) Between the Department of Justice and the Labor Market Administration 
to coordinate immigration in post-war time with internal migraton. 

(6) Condition for successful transference and training would be current, 
close cooperation not only between the various interested agencies, but alsO' 
between these agencies on the one hand, and management and labor on the 
other hand, both on the local as well as on the superlocal level. 

Exhibit 2. — Use of Kadio by United States Employment Service 


With the transfer of the United States Employment Service to the Social 
Security Board in 1939 and the establishment of the present Bureau of Em- 
ployment Security, both the Board and the State employment security agencies 
have made an extensive effort to disseminate information on employment se- 
curity to the public by radio With the coming of the national defense pro- 
gram, this informational effort has progressively increased in view of the 
heavy responsibilities which the United States Employment Service has been 

Emphasis in this radio program has been geared to the changing situation 
and to the administrative necessities of the employment security program, 
with particular stress upon the employment service. The chief categories in 
which information has been issued have been, (1) urging workers to register 
with local employment offices and, in particular, workers having skills needed 
in defense industries, (2) warnings to workers against undirected travel in 
search of defense jobs, (3) information regarding job openings, and (4) 
general information on developments in the defense program. 

Over a period of 2 years, almost every form of radio activity emphasizing 
the above points has been carried on, in more or less degree. This includes 
speeches by Washington, State and local employment security and defense 
officials ; interviews with these officials ; dramatic sketches, transcribed and 
"live" ; and spot announcements. National radio chains and local radio stations 
have cooperated. 

The migration of defense workers, in which your committee is undoubtedly 
chiefly interested, has been given attention by the Board and State agencies 
during the past year. A continuous attempt has been made to influence 
migration by outright warnings to workers not to travel without prior check- 
ing with the local employment office, by pointing out that the local offices are 
the central clearing points for jobs, and by explaining the Government labor 
clearance system by which a worker in one locality, through his local employ- 
ment office, can be put in touch with jobs in his line in other parts of the 

The Board has been instrumental in securing several Nation-wide broad- 
casts in which these points were emphasized. For example, Administrator 
Paul V. McNutt was interviewed by Eric Sevareid over a Columbia Broad- 
casting System network on March 22, 1941; and Mr. Ewan Clague, Director, 
Bureau of Employment Security, was interviewed over a Mutual Broadcasting 
station on March 14, 1941. Mr. William Green, president of the American Fed- 
oration of Labor, strongly emphasized this point in a speech over a National 
Broadcasting Co. network on April 3, 1941. 

In addition to national broadcasts, the Board has prepared a large amount 
of finished and draft radio texts which have been very widely used by State 
employment security agencies. 


In a series of transcribed radio messages, of which 700 transcriptions were 
made available to State agencies for local radio bookings, the danger of labor 
migration was stressed by Mr. Sidney Hillman of the Office of Production Man- 
agement, and by Mr. Arthur Altmeyer, Mr. Ewan Clague, and Mr. Oscar 
Powell of the Social Security Board. Although we have no statistical data, we 
know that these transcriptions were widely used throughout the country, often 
supplemented by closing announcements from local employment offices, reiterat- 
ing this message. 

Draft radio materials prepared by us, carrying similar emphasis have been : 
A series of 13 radio interviews, "National Defense and You" ; 30 spot announce- 
ments ; a talk entitled "Meeting Labor Needs for National Defense" ; an inter- 
view entitled "Jobs for Youth" ; a speech for State employment security di- 
rectors ; and several sketches in a series of five dramatized radio programs, 
"Jobs for Defense," the latter about to be issued. 

It should be pointed out that these draft materials are often used by 1 to 
48 States and by many of the 1,500 local employment offices in the States. 
Consequently, the broadcast of this material is much more extensive than would 
be inferred by the single listing above. 

Within the last year, all or part of a series of eight transcribed dramatic 
radio programs entitled "Jobs for America," which explained the placement 
functions of the United States Employment Service and urged workers to 
register for jobs, was broadcast over more than 400 radio stations in 47 States. 

In addition to the Board's program, most of the State employment security 
agencies carry on active radio programs. A very consideralDle amount of 
broadcasting on labor migration has been done, particularly in those States 
where the influx of migrant labor has been a serious economic and social 

It is not possible to provide statistical data as to the extent of such radio 
broadcasting but from our examination of State agency informational materials, 
we can assure you that the activity has been continuous, extensive, and has 
utilized speeches, interviews, and spot announcements, chiefly the latter. 

(Enclosed herewith is a sampling of the text of some of the State agency 
broadcasts. Much of this material is of a draft nature prepared by State 
agencies for local office use. Consequently any one script may be used over from 
one to 25 radio stations in a State and, in the case of short announcements, may 
be broadcast by a station several times a day or week. 

In addition to emphasis by radio both the Board and the State agencies 
have been utilizing other informational media to influence labor migration. For 
instance, last year we provided State agencies with a poster warning workers 
not to travel without first checking with local employment offices, for posting 
in local post offices throughout the country. Several pamphlets emphasized this 
point, as well as a number of speeches, news releases, etc. Likewise, many 
State agencies have been utilizing various media for issuing similar messages. ' 

It is a major part of our present informational program to continue our 
efforts to reduce or direct labor migration by working with the informational 
staffs of our regional offices and the State agencies in those areas which are 
particularly affected. This will include those areas into which workers are 
migrating and those from which the majority of workers come. 


Excerpts Feom State Employment Secubity Radio Texts on Laboe Migration 

"The place to apply for work * * * either here in East St. Louis or 
anywhere else * * * jg j-ight here in East St. Louis at the Illinois State 
Employment Service at 437 Missouri Avenue. * * * An inquiry at 437 
Missouri Avenue— before starting a job hunt to another city— will usually save 
the worker the disappointment that he ordinarily faces when he reaches his 
destination — the information that there are no openings or that only local labor 
is being hired." 

"Unemployed workers * * * don't leave your home cities and travel 
around the country following rumors of jobs. The best way to get a job now 
IS to register with the nearest office of the Illinois State Employment Service 
and then remain in your home town where you can be reached quickly when 
you are needed for a defense job. You've probably read in vour daily paper 
about the letting of contracts for defense plants. * * * j 'want to ask any 
60396 — 41 — pt. 20 12 


unemployed worker who may have read about these plants * * * ^^^j ^^jjq 
may have any idea of going to the towns where the plants are being built to 
look for a job * * * ^ot to do it. I'm going to repeat that again for 
emphasis * * * don't * * * don't * * * don't go to towns 
where Government plants are being built to look for work. You will not get 
a job that way * * * you will cause a lot of unnecessary confusion 
* * * and you'll probably miss out on a job at home as well. * * * 
Practically all the jobs in connection with such plants * * * ^pill be filled 
through the offices of the State employment services in the towns where the 
plants are located. * * * '^Iqu who rush to these towns * * * ^i\] be 
wasting time and money. * * * The best way to get a job in the defense 
industries * * * is to register with your local office of the State employ- 
ment service and then stay right in your home town wliere you can be reached 
when the employment service needs somebody in your line of work." 


"If you are looking for work, consult the office of the Georgia State 

Employment Service. * * * Don't travel about until you have checked the 
job possibilities with the Employment Service. Tlie local office is located at 

"If you are looking for work, you should register with the Public Em- 
ployment Office. * * * This office can get information about jobs available 
throughout the State as well as the country in connection with the national-de- 
fense pro'-ram. * * * Dq not travel looking for work in other cities until you 
have applied for work at the office, located at " 


"Don't depend on rumor about jobs opening up in defense industries. Make 

certain by asking at the office of the Florida State Employment Service, 

located at * * * Save time and money by knowing where the job 

is before you start out." 


"You can save time and money by inquiring at your local Pennsylvania State 
Employment Office before traveling in search of defense jobs." 

"I would recommend that you shouldn't leave your home town in search of work 
elsewhere * * * unless the local employment office tells you there is a defi- 
nite opening somewhere else." 

Exhibit 3. — Press Release of Labor Division, Office of Production 


"Washington, D. C. 

August 9, 1941 

Machinery set up through Government, management, and labor cooperation for 
reemployment and training of 3,600 displaced automobile workers in the Buffalo 
industrial area should serve as a national model in overcoming the unemployment 
created by shut-down of nondefense plants. Acting Director-General Sidney Hill- 
man, of Office of Production Management, said today. 

Hillman received reports from Arthur S. Flemming, chief of the Labor Supply 
Branch of Office of Production Management, and Eli L. Oliver, Chief of Office of 
Production Management's Labor Relations Division, that four big defense plants 
in the Buffalo area a'vreed in a conference yesterday to employ at once 500 of the 
workers who lost their jobs when the North Tonawanda Chevrolet plant closed 
down for retooling. The plant will reopen in several months as an airplane- 
engine factory. 

Eight hundred others have already been rehired, and 225 others are being 

Hillman pointed out that the Buffalo-area problem was typical in many respects 
of the labor dislocations expected to result in tlie next few months from conver- 
sion of nondefense plants and from the operation of defense priorities which will 
deprive factories of their essential materials. Hence the pattern worked out for 
the Buffalo workers may be considered as a "pilot" which should be helpful in 
meeting similar situations elsewhere, Hillman said. In one-industry cities, addi- 


tional steps will be necessary, such as the awarding of defense contracts to 
consumer-goods plants, especially among the small and medium-sized enterprises, 
he noted. 

Flemming predicted at least half of the 3,600 would be employed within a month. 

"Defense training facilities in the public vocational schools of the Buffalo area 
will be readjusted and streamlined to provide opportunity for training in the 
shortest possible time to those of the Chevrolet employees who are not now com- 
pletely qualified, and who desire to equip themselves for future employment," 
Flemming reported. He estimated about three-fourths of the 3,600 will need soma 
retraining to qualify for defense jobs. 

Flemming also pointed out tliat tlie retraining period averages from 3 to 5 weeks, 
that the Buffalo plants have signified their willingness to hire all workers qualified 
by retraining and that each trainee will receive $15 a week as unemployment com- 
pensation during the period of training. 

Oliver reported that Walter Reuther, director of the General Motors division of 
the United Automobile Workers, Congress of Industrial Organizations, had taken 
special steps to cooperate and speed up the registration of the auto workers with 
the public employment offices. Under this procedure, Reuther is assigning union 
representatives of the employment oflices to assist in registration and classifying 
of workers. 

Expansion of fields of employment for the furloughed Chevrolet workers wag 
promised through a statement by Nathan Cowan, subregional director of the 
Steel Workers Organizing Committee, who said his organization would help to aid 
the men get jobs in Buffalo area steel plants. 

The four defense plants whose executives met with Office of Production Man- 
figement rein-esentatives in working out the procediire were : Bell Aircraft Cor- 
poration, Worthington Pump & Machinery Corporation, Buffalo Arms Corpora- 
tion, and the Curtiss-Wright Corporation. 

Exhibit 4. — Placement, Types of Jobs, and States of Origin in 
Clearances Through National Youth Administration Regional 

report by aubrey williams, administrator, national youth administration, 
federal security agency, washington, d. c. 

August 2, 1941. 
Mr. Aubrey Williams, 

Administrator, National Youth Administration, 

Federal Security Agency, Washington, D. C. 
Dear Mb. Williams : Thank you for your letter of July 30. A copy of the 
hearing of July 21 will be sent you when it is printed. 

As the committee understands it, the National Youth Administration residence 
centers in the various States are acting as clearing houses for out-of-State youth. 
Can you tell us whether a study is being made on out-of-State young people in the 
National Youth Administration residence centers as to their age, birthplace, last 
previous address, type of training undertaken, and industry entered upon comple- 
tion of training? 

We feel that the National Youth Administration is in an excellent position to 
guide the migration of young people into defense jobs, and we equally feel that 
complete studies made of such migration by the National Youth Administration 
would be of great value both to the National Youth Administration and to the 
committee in its work. 

With all good wishes, I am. 

John H. Tolan, Chairman. 

October 28, 1941. 
Mr. John H. Tolan, 

Chairman, House Committee Investigating National Defense Migration, 

Wasliington, D. C. 
Dear Mr. Tolan : Attached are tables showing information on placements made 
at several of the National Youth Administration regional resident centers. These 
tables have been compiled in accordance with your resquest of August 2, 1941. 



Detailed placement information was available for only a portion of the youth 
employed at these centers who obtained jobs in industry. 

Accordingly the information presented in the attached tables represents only an 
incomplete picture of the placement situation. However, it may serve to give 
some indication of the types of jobs being obtained and their locations. 

It should be noted that the length of time covered by the data varies in the dif- 
ferent centers. Where available, the States of origin of the youth as well as the^ 
States of placement have been shown. 
Sincerely yours, 

Aubrey Williams, Administrator. 

(The tables referred to above are as follows:) 

Table A. — Federal Secui'ity Agency, 'National Youth Administration — Out-of- 
State youth placed in private industry, National Youth Administration 
regional resident center, Nepaug, Conn., June 3 to Aug. 20, 19Iil 

State of origin 

state of placement and firm 








Grand total .. - -.- 















Billings Spencer Co., Hartford 

















Bullard Co., Bridgeport 


Fruehof Trucking Co., Hartford 


General Electric Co., Bridgeport 


Hamilton Propeller Co., Hartford 


' i" 



Hand Lathe Co., Torrington 


Hanson & Whitney Co., Hartford 

Hartford Machine and Screw Co., 
Hartford . -.- 


Hartford Specialty Machine Co., Hart- 

Industrial Welding Co., Hartford 


M. & B. Co., HartioiQ . 



M. & B. Co., New ±iavbu_ 



New Departure Co., Bristol 






New England Blower Co., Hartford 

Nickerson Tool Co., New Britain. 

Scoville Mfg. Co., Waterbury 


Seth Thomas Clock Co., Thomaston 



Sterling Blower Co., Hartford 



Underwood-Elliott-Eisher Co., Hartford. 




Union Hardware Co., Torrington 

United States Aluminum Co., Bridge- 
port ... 





Vought-Sikorsky Aircraft Corporation, 

Warren-McArthur Co., Bantam 


New Jersey: Electric.Boat Co., Bayonne 





Table B. — Federal Security Agency, National Youth Administration — Youth 
placed in private industry. National Youth Administration regional resident 
center, Quoddy Village, Maine, June 1, 19//0, to Aug. 1, lOJfl 

state of placement and firm 

Grand total _ 
Connecticut, total- 

Hamilton Standard Propeller Co., Hartford 

Pratt and Whitney Aircraft, Hartford 

Vought-Sikorsky Aircraft Corporation, Bridgeport. 

Subtotal aviation 

Allen Manufacturing Co., Manchester 

American Brass Co., Ansonia 

American Steel & Wire Co., New Haven... 

Aluminum Co. of America, Bridgeport 

Blake & Johnson Co., Waterville 

Corbin Screw Corporation, New Britain 

Electric Boat Co., Groton 

Farrell Foundry & Machine Co., Derby 

General Electric Co., Bridgeport 

Geometric Tool Co., New Haven. 

Hamilton Standard PropeDor Co., Hartford 

Hanson-Whitney Machine Co., Hartford 

Hartford Machine Screw Co., Hartford 

Jacobs Manufacturing Co., Hartford.. 

Laminated Shim Co 

Leeds Electrical & Manufacturing Co., Hartford. 

Lewis-Engineering Co., Naugatuck 

Lucas Machine Co., Bridgeport 

Manning, Maxwell & Moore, Bridgeport 

Maxim Silencer, Hartford 

O. F. Mossberg & Sons, New Haven 

New Britain Machine Co., New Britain 

New Departure Co., Meriden 

Pratt & Whitney Aircraft, Hartford 

Remington Arms Co., Bridgeport 

Standard Machine Co., Mystic 

Stanley Works, New Britain 

Yale & Towne Manufacturing Co., Stanford 

Winchester Repeating Arms Co., New Haven... 

Subtotal machine shop 

General Electric Co., Bridgeport. 

Air Systems Manufacturing Co., Bridgeport 

American Steel & Wire Co., New Haven... 

Trumbull Electric Co., New Britain... 

Vought-Sikorsky Aircraft Corporation, Bridgeport, 

Subtotal, sheet metal 

Maine, total. 

John H. Jameson, Bangor 

Lucas Tree Expert Co., Portland. 

Subtotal, agriculture 

Hotel Eastport, Eastport 

Warren K. Wentwortli, Kennebunk. 

Subtotal, cafeteria 

Bates Manufacturing Co., Lewiston 

International Harvester Co., Portland 

Madison Woolen Co., Madison 

Pepperell Manufacturing Co., Biddeford 

Saco-Lowell Shops, Biddeford ... 

Terry Roller Bushing Co., Bath 

Worumbs Manufacturing Co., Lisbon Falls. 

Subtotal, machine shop 

Thomas Laughlin Co., Portland. 
Maryland, total 

Glenn L. Martin Co., Baltimore. 

Type of work 




Machine shop. 






























Sheet metal. 






Machine shop. 







Sheet metal - 



of youth 



Table B. — Federal Security Agency, National Youth Administration — Youth 
placed in private industry, National Youth Administration regional resident 
center, Quoddy Village, Maine, June 1, 1940, to Aug. 1, 1941 — Continued 

State of placement and firm 

Type of work 

of youth 

Massachusetts, total- 

Atlantic Bakery, Fall River.. 
Megowen-Educator Ford Co. 
Oceanside Hotel, Magnolia... 
Blade's Barbecue, Boston 

Subtotal, cafeteria. 

Acushnet Process Co., New Bedford 

American Bosch Corporation, Springfield 

Atlas Tack Corporation, Fairhaven 

Atwood & Morrill Co., Salem 

Bethlehem Steel Co., East Boston 

Bidwell & Thomas, Greenfield 

Bird & Son Co., North Walpole 

Brown & Sharpe Co., Hadley 

Cogswell Manufacturing Co., West Springfield 

Continental Screw Co., New Bedford 

Fore River Plant, Quincy 

General Electric Co.: 



Greenfield Tap & Die Corporation, Greenfield 

J. W. Greer Co., Cambridge 

F. A. Harris, Springfield 

Johnson & Johnson Manufacturing Co., Hadley Falls. 

Lewis-Shepard Co., Watertown 

Morse Turist Drill & Machine Co., New Bedford 

F. W. Perlyshire Co., Walthan 

Reed & Prince Co., Worcester 

Simond's Saw & Steel Co., Fitchburg 

Walworth Manufacturing Co., Boston 

Warren Telechron, Ashland 

Watertown Arsenal, Watertown 

Winter Bros. Co., Wrentham 

Worthington Pump & Machinery Corp., Holyoke 

Subtotal, machine shop. 

Harvey Radio Laboratories, Cambridge. 
National Co., Radio Engineers, Maiden. 

Subtotal, radio. 

American Sheet Metal Works, Watertown. 

New Hampshire, total. 

Kingsbury Machine & Tool Co., Keene. 

Mackera Machine Co., Keene 

Mayberry Shoe Co., Rochester 

Nashua Brass Co., Nashua 

Subtotal, machine shop 

New Jersey, total 

Brewster Aeronautical Corporation, Newark .\irport.. 

Calco Chemical Co., Bound Brook 

Machine Repair, Sale Affiliates, Inc., Hoboken, N. J. 
Watson-Flagg Machine Co., Paterson 

Subtotal, machine shop 

Electric Boat Co., Bayonne. 
Steel & Equipment Co 

Subtotal, sheet metal- 
New York, total 

Bell Aircraft Co., Buffalo 

Curtiss-Wright Corporation, Buffalo 

Link -Aviation Services, Binghamton 

Pan-American Airways, New York City 

Republic Aviation Corporation, Farmingdale. 

Subtotal, aviation. 




Machine shop. 





Sheet metal. 

Machine shop. 





Machine shop. 



Sheet metal . 








Table B. — Federal Security Agency, National Youth Administration — Youth 
placed in private industry, National Youth Administration regional resident 
center, Quoddy Village, Maine, June 1, 19J,0, to Aug. 1, 1941 — Continued 

state of placement and firm 

New York 

American Machine & Foundry Co., Brooklyn 

Buffalo Forge Co., Buffalo 

Dcehler Dye Coating Co., Batavia 

R. E. Dietz Co., Syracuse 

International Paper Co., Niagara Falls 

Intertype Corporation, Brooklyn... 

Manufacturers' Machine & Tool Co., New York City. 

Merrill Bros., Masfeth 

Morse Chain Works, Ithaca. 

Rollway Bearing Co., Syracuse 

Young & Young, New York City 

Subtotal, machine shop 

Pilot Radio Corporation, Long Island City- 

Bell Aircraft Co., Buffalo 

Fastern Wire Goods, New York City. 
Gleason's Works, Rochester 

Subtotal, sheet metal. 

Pennsylvania: Line Utility Co., Jenkinstown. 
Ehode Island, total 

American Standard Watch Face Co., Providence- 
Brown & Sharpe Co., Providence.. 

Franklin Machine Co., Providence 

Screw Machine Products Co., Providence 

Taco Heaters, Providence 

Subtotal, machine shop. 
Vermont, total... 

Henry E. Gtrard, Burlington 

Bryant Chucking Co., North Springfield- 

W. K. Buckley Co., Burlington 

Fairbank, Morse, St. Johnbury 

Howe Scale Co., Ruthland 

Jones & Lamson, Springfield 

Subtotal, machine shop, 

G. S. Blodgett Co., Burlington- 

Type of work 

Machine shop- 





do .-. 






Sheet metal. 





Machine shop. 






Machine shop. 


Sheet metal. 

of youth 



Table C. — Federal Security Agency, National Youth Administration — Out-of- 
school youth placed in private industry, National Youth Administration regimml 
resident center, South Charleston, W. Va. 

State of origin 

State of placement and firm or city 









Grand total 









Maryland, total 







Glenn L. Martin, Baltimore 

Maryland Drydock Co 








City of employment: Baltimore. 


North Carolina, total 



Butler <fe Lee Drug Co., Dunn.. 



Pennsylvania, total 



General Electric 



City of employment: Darby.. 



Table C. — Federal Security Agenoy, National Youth Administration — Oiit-of- 
school youth placed in private industry, National Youth Administration regional 
resident center, South Charleston, W. Va. — Continued 

State of origin 

State of placement and firm or city 









West Virginia, total 








Barium Reduction Corporation, 
South Charleston 










Carbon Carbide Co., South 

Carnegie-Illinois Steel Corpora- 
tion, South Charleston 

Dupont, Belle _.. 





General Machine, South Charles- 


Owens-Illinois Glass, Kanawha 


Trojan Steel Corporation, 



Western Electric Co., Charles- 


Table D. — Federal Security Agency, National Youth Administration — Out-of- 
school youth placed in private industry, National Youth Administration regional 
residence center, Weiser, Idaho, Jan. 1 to Aug, Jf, 1941 

State of origin 

State of placement and firm or city 









Grand total . t 









California, total 




Lockheed Airport . - - 




City of employment: Antioch. . 


Idaho, total . 






Boise Airport, Boise. ... . 











Boise Welding & Machine Shops, 
Boise... . . _._ 

Chamberlain Chevrolet Co., 

Dewey Place, Nampa 

Hotel Boise, Boise .. _. . 

Montgomery Ward, Weiser 


W. W. Gartin, Boise 


City of employment: 



Payette _ 


Oregon, total 







Cortley Allen, Burns 








Ericksons Grocery .- 

Fred Fish, Ironside 

Ironside Lumber Co., Ironside 

J. A. Tcrtling & Son, Hermistcr 


M. A. Bowman. Huntington 




Van Pattern Lumber Co., On- 

City of employment: 





Yuba City 




Table D. — Federal Security Agenoy, National Youth Administration— Out-of- 
school youth placed in private industry. National Youth Administration regional 
residetice center, Weiser, Idaho, Jan. 1 to Aug. 4, 1941 — Continued 

State of origin 

State of placement and firm or city 













Carnation Dairy, Carnation 

Spokane Review, Spokane 

City of employment: 







Walla Walla 


(The following correspondence was received after the publication 
of Part 18 (Detroit Hearings — Industrial Section) and is added to the 
record by authority of the chairman :) 

Exhibit 5. — Labor Policies of Major Auto and Supply Companies 
AS They Affect Migration 

Letter and Statement by United Axjtomobile Workers, Congress of Industrial 


International Union, 
United Automobile Workers of America, 

Detroit, Mich., October 23, 1941. 
The Honorable John H. Tolan, 

Chairman, House Committee Investigating 

National Defense Migration, 

Washington, D. C. 

Dear INIr. Tolan : Your letter of October 17, addressed to Mr. R. J. Thomas, 
president of our international union, has been referred to this department for 
reply. We deeply appreciate the interest shown by your committee in the 
problems confronting the membership of our international union as they relate 
to the national-defense program. 

Enclosed are several copies of the agreement recently reached with the General 
Motors Corporation governing our labor policies as they affect the matter of 
migration. It will interest you to know that this agreement has already been 
adopted by all of the major automobile and automobile parts firms in the 
Nation, including among them Chrysler Corporation, Ford Motor Co., Packard 
Motor Co., Murray Corporation, Hudson Motor, Automotive Parts Association, 
Tool & Die Manufacturers Association, and many others. O. P. M. has ap- 
proved this agreement and considers it applicable to the entire automobile and 
automotive-parts industry. Our union considers the signing of this agreement 
as an important and significant step toward the establishment of an orderly 
transfer of workers from civilian to defense work. Through the efforts of our 
parent organization, Congress of Industrial Organization, and the Ofiice of Pro- 
duction Management we are seeking to extend this agreement or one similar to 
it to the otlier basic industries of our Nation, particularly steel, rubber, radio- 
electrical, etc. This is essential in order that in each community managements 
from all these various industries will be governed by a uniform agreement re- 
garding full use of local skilled labor and their orderly transfer to defense 
work. On page 2 of our enclosed folder, Provision No. 3 under the "Industry- 
Wide Interpretation," you will note that this section provides that the local labor 
supply must first be exhausted before workers from without the community are 
given consideration. This should be of real importance to your committee inso- 
far as this section accomplishes the very purpose wliich your committee is 
seeking to accomplish — the minimizing of migration during this period. 

Provision No. 4 of this same "Industry-Wide Interpretation" mal<es it manda- 
tory that local industry release skilled workers who are currently engaged in 


civilian work, or who are only partially employed, to local defense employers 
who need them for defense work. This provision will greatly speed up the build- 
ing of defense tools (which at present is the bottleneck). This will minimize 
the period between curtailment of civilian work and tlie beginning of defense 
work on a production basis. Obviously any conservation of much needed skilled 
labor in any community makes less possible the necessity of bringing workers in 
from other communities. 

The international executive board of our union recently adopted the policy of 
swing shifts for the automobile industry and simultaneously proposed that the 
machine tool and production facilities of the automobile industry be pooled, 
regardless of consideration to corporation lines. These two proposals will not 
only increase tthe present defense force by one-third, but will also minimize 
the lay-off period resulting from auto curtailment. In making these proposals 
the automobile workers througli their union believe that they are submitting 
practical suggestions to speed the defense of our Nation and simultaneously 
minimize social problems resulting from our defense effort. 

Trusting that this information will be of further help to you in the important 
work of your committee, I remain. 
Very truly yours, 

Victor G. Rexitheb, 
Assistant Coordinator, U. A. W.-C. I. 0. Defense Employment Division. 

Defense Unemployment — What the U. A. W.-C. I. O. Is Doing About It 

Sidney Hillman, director of the Labor Division of O. P. M. on September 17, ' 
1941, issued the following six statements of policy which labor and management 
will be expected to follow in handling labor problems arising out of the cur- 
tailment of production in the automobile industry. 

The statements of policy were prepared at a series of conferences in Detroit, 
Mich., participated in by representatives of the leading automobile manufac- 
turers, the U. A. W.-C. I. O., and the Labor Division of the O. P. M. The text 
of the six statements follows : 

statement no. 1 

Where a man working on nondefense production is laid off and obtains defense 
employment with another company, and that fact is certified to his former 
company, he will not have to report back for civilian production work in order 
to protect his seniority so long as he retains the defense employment to which 
he was certified. If he shifts from one defense employment to another, there 
must be a recertification as to his new defense employment. Employers con- 
cerned with the application of this policy will work out arrangements which 
will result in the maximum possible acceleration of the defense program. 

statement no. 2 

Transfer of employees to defense work shall be by seniority in the following 
order : 

First. Those fully qualified for skilled or semiskilled jobs on the basis of past 
experience and training. 

Second. Those who can qualify within the period normally given to new 

When management and representatives of the workers are agreed that no 
employees or an insufiicient number of employees with seniority are available 
in the first group, new, fully qualified employees will be hired. 

statement no. 3 

When hiring new employees for defense work, qualified applicants working 
on nondefense work with seniority in local industry will be hired before workers 
coming from other localities. When so hiring, the qualified applicant with the 
longest seniority record will receive preference. 

The senior employees among those working in plants where employment is 
decreasing who can be spared ; who elect to accept such defense employment ; 
and who are found acceptable will be the first released with full protection of 
their seniority rights. 



Skilled tradesmen laid off, partially employed, or employed at occupations 
other than their trade or its equivalent in defense usefulness, will be released 
upon their request, with protection of their seniority rights, for full-time 
defense work (40 hours per week) at their trade. The need for these workers 
in defense employment will be certified to the worker's employer. 


The above policies are to be construed as a pattern for industry and labor 
to follow and are not retroactive. It is understood that their application is a 
local community problem and must be worked out on the basis of cooperation 
between plants in a community and the workers involved. 

The operating machinery to effect this point will be set up at an early date. 


1. Recall of employees : An employee loaned or laid off, whether unemployed 
or currently employed on defense or nondefense work, must report back for 
defense employment to the company with which he holds his original seniority, 
if and when called, on notice of at least 1 week. Recall of employees to defense 
work presupposes, and management will endeavor to provide, full-time employ- 
ment, contingent upon the availability of the essential tools, material, and facili- 
ties. Skilled tradesmen will be subject to recall only for full-time defense 
employment at their trades or equivalent. 

2. Defense training : For the purpose of these policies, defense training is to 
be considered defense employment, provided there is an understanding between 
the employer and the employee that the employee is being trained for a specific 
pay-roll job. 

Industry-wide Interpretation of O. P. M. Cxirtailment Labor Poucies 

The following is an agreed upon interpretation of the policies enunciated by 
the OflSce of Production Management, September 17, 1941, as they affect all 
plants of the automobile and automotive parts industry : 

provision no. 1 

Where a man working on nondefense production is laid off and obtains 
defense employment with another company, and that fact is certified to his 
former employer, he will not have to report back for nondefense production 
work in order to protect his seniority so long as he retains the defense employ- 
ment to which he was certified. If he shifts from one defense employment to 
another, there must be a recertification as to his new defense employment. 
Employers concerned with the application of this policy will work out arrange- 
ments which will result in the maximum possible acceleration of the defense 

provision no. 2 

Transfer of employees from nondefense to defense work in each local bargain- 
ing unit shall be in line with agreements regarding the transfer of employees. 
Employees fully qualified for skilled and semiskilled jobs on the basis of past 
experience and training shall be transferred in line with their seniority. 

If no such employees or an insufBcient number of such employees who have 
made application are available, management will notify the shop committee 
and new, fully qualified applicants may be hired. 

If no such fully qualified applicants are available or it is necessary or desir- 
able to train men for the work, employees with the greatest seniority working 
in the plant who have applied and who can qualify within the period normally 
given to new employees shall be given the opport'unitv to qualify before new 
employees are hired to be trained for the job. 


When hiring new employees for defense work, qualified applicants out of work 
on account of authorized government curtailment of nondefense production, or 


employees working on nondefense production in local industry where they can be 
spared or loaned, and where curtailment in their industry is authorized for the 
near future, will be given preference in such employment based upon length of 
experience in the industry or occupation. 

Such employees who are working or who have worked in local industries will 
be given preference over employees from other localities who have also been laid 
off because of curtailment. 

Employees working in plants on nondefense work where employment is decreas- 
ing who can be spared or loaned ; who elect to accept such defense employment ; 
and who are found acceptable and so certified by the prospective employer will 
be released with full protection of their seniority rights. 


Skilled tradesmen, partially employed, or employed at occupations other than 
their trade or its equivalent in defense usefulness, will be released upon their 
request, with protection of their seniority rights, for full-time defense work 
(40 hours per week) at their trade. In instances in which a collective agree- 
ment provides for a reduction of hours below the 40-hour basis, and employees 
collectively elect such reduction, the schedule of hours so reduced shall be 
regarded as full-time employment for the purpose of this provision. The 
prospective employer must certify to the present employer that he has offered 
the employee full-time defense work (40 hours i)er week) at his trade, before 
the request is granted. 


The above provision shall become operative October 2, IMl and shall not 
be retroactive, except that those provisions dealing with the protection of the 
employee's previously established seniority status shall be retroactive to Sep- 
tember 17, 1941. 


(a) Recall of employees. — Any employee loaned or laid off, whether unem- 
ployed or currently employed on defense or nondefense work, must report back 
for defense employment to the company with which he holds his original 
seniority for work in the same community, if and when called, on notice of 
at least one calendar week. Recall of employees to defense work presupposes, 
the management will endeavor to provide, full-time employment, contingent 
upon the availability of the essential tools material, and facilities. Skilled 
tradesmen will be subject to recall only for full-time defense employment at 
their trades or the equivalent. 

(b) Defense training. — For the purpose of these policies, defense training^ 
is to be considered defense employment, provided there is an understanding 
between the employer and the employee that the employee is being trained 
for a specific pay-roll job. 


(This section is reserved for a provision outlining an appropriate appeal 
procedure for the handling of all grievances arising out of the above agree- 
ment which cannot be settled with local management. Such procedure should 
be negotiated immediately with your local management if your plant is not 
included among the corporations listed below.) 

The following is a suggested section which has already been agreed to by the 
General Motors Corporation : 

Any claim of discrimination iy an individual employee arising out of these 
provisions may be reviewed hy the shop committee tcith the local plant man- 
agement but shall not be subject to further appeal. The slwp committee is 
given the right to appeal any ojiarge of general discrimination to the corpora- 
tion through the defense employment division of the international union, 
U. A. W.-C. I. 0. Such charges must be supported by written evidowe at the 
time the appeal is made. 

The above agreement affecting all plants of the automobile and automotive 
parts industry was approved October 6, 1941, by : U. A. W.-C. I. O.— O. P. M., 
and the following corporations: General Motors Corporation, Chrysler Corpora- 



tion. Ford Motor Co., Automotive Parts Association, Tool & Die Manufacturers 
Association, Murray Corporation, Packard Motor Co., Hudson Motor, Wilcox 
Rich, Barnes-Gibson-Raymond Spring Co. 

If your plant is not covered by any of the above corporations, you are still 
protected by the agreement, but you should arrange immediately to have your 
management accept the above agreement, either by signing same or by exchange 
of letters. Copies of the agreement may be secured through the office of 

City Dei'ense Employment Committees 

(a) functions 

1. To cooperate with cooi'dinator's office in the orderly tr'ansfer of civilian 
workers affected by auto curtailment to defense jobs. 

2 To compile data regarding plants in their city which will assist the coordi- 
nator's office autl the Washington committee in securing additional defense work. 

3. To cooperate with local officers of State employment service to see that 
hiring and transfers affected through the Employment Service are in conformity 
with O. P. M. policy. 

4. To help publicize and put into effect the defense employment program of the 
U. A. W.-C. I. O. 


1. In every major city which will be affected by auto curtailment or which, 
because of considerable defense work, may be able to absorb additional workers. 
















1. It is suggested that each city committee consist of not less than three or 
four members. 

2. The regional director may appoint members to these committees or may 
permit the local unions participating to select the members. 

3. Each committee shall elect its own chairman. 


1. It is suggested that the chairman or some member of each city committee 
devote full time to these activities. 

2. The regional director should endeavor to have the locals being serviced by 
these committees, shai'e in the expenses entailed by the committees. 

Region or State Employment Committees 

(a) The chairman of each city committee within a given fegion or State 
shall constitute the region committee. 

(&) The function of the region committee will be to assist the coordinator's 
office in the rapid dissemination of data and policy information to all city 
committees within each region. 

U. A. W.-G. I. O. Defense Employment Division, 281 West Grand Boulevard, 
Detroit ; Geo. F. Addes, coordinator ; Victor G. Reuther, assistant coordinator 

Certification of Hire for Defense Work 

When an employer hires a worker for defense work who was formerly em- 
ployed by another firm with which he acquired seniority, that fact shall be 
promptly certified to that employer with which original seniority was acquired. 
Certifications shall be made on form SES 326 (sample below) provided for this 
purpose and shall be prepared in quadruplicate. The distribution of this form 
shall be as below : 

1. One copy to the worker involved (who will turn it over to his local union 
or retain for his own record). 

2. A copy for the certifying employer's file. 

3. A copy to the former employer where seniority was acquired. 

4. A copy to the local office of the State employment service. 

Note. — The responsiliility for requesting certification rests icith the individual 
member affected. 

SES 326 


Certification of Hire for Defense Work 

Code classification 

Seniority date 

To This is to certify that as of 

(Name of company or corporation) (Date) 

we have employed on defense work 

(Name of person) 
formerly employed 

as a by your firm as a 

(Name of skill or classification) 

By : 

(Name of company) Title of person in cliarge of personnel 

or employment 

notice to the worker who accepts a defense job 

To protect your Seniority rights, it is necessary and to your 
advantage to see to it that this card is made out by your defense 
employer and a copy sent to the employer with which original 
seniority was acquired. You should also see to it that your new 
employer furnishes you with a copy which you should turn over 
to your union or keep for your own record. 


Exhibit 6. — The Buffalo Plan 

interoffice memoranda of new york state employment office to labor division, 
office of production management, from august ig to november 10, 1941 ^ 

August 16, 1941. 

This report briefly narrates tlie first week's activity relative to General Motors 
Co.'s displaced workers in this area. 

The report is snhmitted in two sections. In part I, we outline what has been 
done towards the registration for employment, and the referral to national- 
defense training courses. In part II, Buffalo employer reaction to the hiring 
of this group is briefly discussed. 

Pabt I 

Following the meeting in the Lafayette Hotel on Thursday, August 7, we sent 
employees from this office to the three Buffalo companies affected by the Pratt & 
Whitney change-over, and listed all laid-off emplo.yees on individual 4x6 cards. 
These cards will be retained as a master control file and all activity such as 
training, referrals, placement, etc., in connection with any of these persons will 
be noted thereon. 

On Saturday afternoon the staff of this office addressed envelopes to each of 
these workers and in.serted a mimeographed letter which had been prepared by 
the union (a copy of this form is inclosed). Together with the mimeographed 
letter, we enclosed our Form 334 (copy enclosed). 

General Motors employees were scheduled to report at the approximate rate 
of 700 per evening beginning with August 11. At that rate all of them will have 
been scheduled to report between the hours of 6 and 9 p. m. some evening this 
week. The response to the call-in to date has been rather disappointing. The 
first night approximately 200 reported. Each night since Monday evening less 
than 200 have responded. On Wednesday we selected approximately 200 who had 
failed to report on Monday and Tuesday evenings and directed telegrams to 
them (copy attached). The response to the telegrams also was unsatisfactory, 
bringing in but 70 workers. 

Several reasons have been called to our attention for failure to respond to 
call-in, among them the following : 

1. These workers are accustomed to a 5- to 6-week lay-off in the summer and 
this year, as in other years, are vacationing at this time. 

2. Unquestionsibly, many of these people have found employment. 

3. Many of these workers have returned to their homes in other sections of 
the country and are not now available for local employment. 

4. Many of these workers, realizing that their opportunity for reemployment 
with General Motors will be greatly enhanced if they have acquired training 
along machine-shop lines, are attending full-time school (all day or all night) 
and therefore are not interested in immediate employment. 

On Monday next, we will canvass all those who failed to respond to call-in, 
by means of a mimeographed letter in which we request that the applicant 
either report immediately or if unavailable, fill in a questionnaire and return 
it In a self-addressed envelope enclosed witli the letter. We will be in a 
much better position to determine the number still available for local employ- 
ment after we have completed this survey. We should have the results by 
August 22 and will immediately thereafter again report to you. 

As claimants appear in our office during evening hours of this week, we 
immediately register those who are not registered and if possible, refer them 
to employment. Likewise, those who have previously registered are referred 
if there are available openings for which they qualify. 

Immediately following the interview, those who cannot be referred to em- 
ployment, as well as others who are interested, are escorted to representatives 
of the Board of Education (16 in number), located in a section of our office. 
There these workers are advised regarding the courses of instruction offered 
in the Buffalo national-defense schools and the referral to the school is made 
at this point. Almost all former General Motors workers are signing up for 

1 Submitted at reouest of the committee by Labor Division, Office of Production Manaee- 
ment, Washington, D. C. See testimony of Douglas Brown, p. 8139. 


national-defense training of some sort, with machine-sho'p practice and aviation 
subjects predominating. As a matter of fact, tlie capacity of tlie local defense 
classes is becoming somewhat taxed. 

Part II 

The Bell Aircraft Corporation has been quite cooi^erative in accepting laid- 
of£ General Motors employees. This office has access to all orders for workers 
which the employment manager of that company has, and they are pleased to 
have us refer qualified General Motors workers to these openings. This com- 
pany has also employed many of these workers at its employment office. The 
number employed will be supplied in the next report. 

I contacted Mr. Matoon, personnel director of the Curtiss Co., on August 11 
and he advised that it was extremely difficult for him to commit himself at 
this time. He states that because his company went on a 6-day week on 
August 4, they now have a surplus of man power. He is of the opinion that 
they can absorb no additional workers within the next 3 weeks. 

Mr. Matoon suggested, however, that I bring the registered cards of General 
Motors employees to his plant on Monday, August IS and discuss these appli- 
cations with his employment managers, Mr. Lucas and Mr. Bolton. After my 
meeting with these men, I am to see Mr. Matoon. A report of this meeting 
will be mailed promptly. 

On August 11, Mr. Gray, personnel manager of Buffalo Arms Corporation 
and Houde Engineering Co. was also called. Frankly, he did not seem too 
cooperative. He pointed out that the Buffalo Arms plant had already employed 
28 of these workers and the Houde plant had hired 32. When I advised him 
that we desired a requisition for workers so that we might refer qualified 
persons to him, during the mass-interview program being carried on each 
evening of this week, he suggested that I call him again on Wednesday, August 
13. Mr. Gray stopped in at our office on August 12 and advised that he would 
call me the following morning. He failed to do so and upon calling his com- 
pany, I was advised that Mr. Gray was out of town and had left no instruc- 
tions with the employment manager of the Buffalo Arms Co. relative to the 
hiring of General Motors employees. 

I asked the employment manager to have Mr. Gray call me on Thursday 
morning, but he did not do so. It is obvious that an effort is being made to 
evade the issue. 

Because of Mr. Schanheuser's absence, I discussed the placement of General 
Motors workers with Mr. Yarrington, employment manager of the Wortbington 
Pump Co. Mr. Yarrington assures me that his company is extremely anxious 
to cooperate. 

I am to meet with Mr. Yarrington on Tuesday, August 18, at his office. I 
will have with me at that time the registration cards of these workers. The 
results of this meeting will also be reported to you. 

Union officials seem to be quite well pleased with the arrangements for 
handling their workers. Representatives of the two locals (424 and 774) have 
been in attendance each evening and have offered full cooperation and 

We will be able to give you definite figures regarding the number who re- 
ported, the number placed, etc., in our next week's report. You may rest as- 
sured that this service will make every effort to place these workers. I do 
not believe the cooperation of the Buffalo Arms Go. will be forthcoming until 
some pressure is exerted. We would be sincerely appreciative of assistance 
in handling this company. We believe a phone call from the Office of Produc- 
tion Management reminding Mr. Gray that his company is expected to cooperate 
would serve the purpose. 

August 22. 1941. 

The General Motors displaced workers who did not appear during the first 
week's evening registration hours have been sent the additional call in letter, 
with questionnaire attached (sample enclosed). 

The personal response was again considerably below expectations, only about 
10 percent appearing. An analysis of the completed questionnaires returned 
indicates that approximately 40 percent of this group are now employed, an 
additional 40 percent have failed to acknowledge this canvas either in person 
or by return of the questionnaire, the other 20 percent are still imemployed. 
It would seem that the following conclusions can now be drawn : It is, we think, 


safe to assume that 80 percent of all those who did not appear during the 
original mass registration are employed or are not interested in employment, 
the other 20 percent are unemployed. When we have completed the processing 
of questionnaires we believe that we will have an active file of approximately 
8G0 unemployed displaced General Motors workers. 

The writer toiumues lo comact tne enipioymeut representatives of the four 
companies committed to cooperating in the employment of these workers. 

On Monday, August 18, the employment manager of the Worthington Pump 
Corporation examined the cards in my presence and selected 8 General Motoi's 
displaced workers as prospective employees with this company. These persons 
have been referred, the results are not yet obtainable. He points out that his 
company is in a position to do but little hiring and that prior to our visit he had 
employed 17 of these men out of a total of 40 workers added to his company's 
pay roll. He assures us that he will attempt to use General Motors workers in 
all future openings. We believe that the placement of a large number with this 
company is impossible, in the near future. 

On Tuesday evening, August 19, the writer met with Messrs. Boulton and Lucas, 
employment managers of the 2 local Curtiss plants. After an examination of 
the cards in fine, we received an order from the Curtiss Co. for 15 workers. This 
order has been filled. At the same time an order was given for 10 machine 
operators. The results of these referrals are not yet available. The following 
day an order was received from the Curtiss Cheektowaga plant for 15 sheet 
metal workers with tools. We believe that it will be possible to fill 10 of these 
openings from among the General Motors workers. 

Both employment managers express themselves as anxious to cooperate in 
the placement of these men. They both point out, however, that the orders 
from their production department for men have slowed down considerably and 
the addition of a large number at this time is not possible. Neither Curtiss 
plant is adding workers in numbers. Since the Buffalo meeting on August 
between the Office of Production Management and employers, the Curtiss Co. 
advises that they have added 119 of these workers to their pay roll. 

We have had no orders for workers from the Buffalo Arms Corijoration which 
might permit the referral of General Motors employees. Mr. Harmon visited 
tlie employment manager of this company at my suggestion, on Tuesday, August 
19, for the purpose of attempting to encourage wholehearted cooperation on 
the part of this company. This visit has as yet netted no tangible results. 
The employment manager of this company reports today that since the August 6 
meeting they have added 10 former General IMotors workers to their pay roll 
and they are considering several others for employment. We will continue to 
put forth the necessary effort in the case of this company. 

The Bell Aircraft Corporation continues to cooperate. The employment 
manager of that company has expressed a desire to have us I'efer General 
Motors employees to all openings in which we believe they might possibly fit. 
He is handicapped, as are the Curtiss employment managers, by lack of orders 
from his production departments for men. This company has added 123 former 
General Motors employees to its pay roll since the Aitgust 6 meeting. We have 
arranged to meet with Mr. Gunderson, employment manager, over the week end 
at which time he will study the record of each General IMotors employee regis- 
tered with us and will indicate those he is willing to consider for future 

All employers point out that these workers will be much more readily adaptable 
to their work when they have completed the training courses in which sevei'al 
hundreds are now engaged. It is true that many of these workers have no 
experience which qualifies them for other than General Motors assembly em- 
ployment. Further, the type of assembly work in which they were engaged 
in the General Motors plants was of such a nature that it did not qualify 
these men for aviation assembly, for example. Many of these men had been 
engaged, for instance, solely in the attachment of one automotive part, such 
as muffler, headlights, fenders, etc. Certain Buffalo companies still refuse to 
consider these workers for their openings. We are, however, gradually break- 
ing down this resistance. The reason most frequently given by employers for 
their attitude is their firm belief that upon the reopening of the General" Motor.s 
plant these workers will return. 

We w5ll contiiuie to put forth effort toward the placing of these workers 
and will forward our next report to you on Saturday, August 30. We should 
be in a better position at that time to furnish exact figures. Union repre- 
60396— 41— pt. 20 13 


sentatives continue to visit our office daily and seem well pleased with the 
progress made. 

August 29, 1941. 

Former General Motors employees have not been absorbed in any great num- 
ber during the past week, either by the four employers committed to cooperate 
or by other local industrial organizations. There has been a very apparent 
slackening in the employment acceleration recently which w^ould naturally 
be reflected in the problem of placing the General Motors group. More spe- 
cifically, the "four companies" are not hiring these men in anticipated numbers. 

Several reasons may logically be advanced — apart from the fact that none 
of "the four" is in the market for men in large numbers. Obviously, after the 
first one-third or one-half of the displaced workers are picked up there remains 
a balance which is not as readily absorbed because of lack of skill or perhaps 
because there is not represented in this remaining group the same high caliber 
of men. In other words, a sorting ]r.-ocess has taken place — skilled and semi- 
skilled are employed and the unskilled remain unemployed. Further, the em- 
ployment representatives of none of "the four" appear to be in a position to 
use this unskilled group even in the openings which exist from day to day in 
their establishments. 

No great difficulty is being experienced in selling the applicant who can, for 
example, operate a lathe or milling or similar machine, even though he cannot 
read prints or set up his own work. On the other hand, the placement of an 
ex-General Motors assembler presents a real problem and will continue to do 
so until one or more of the local employers hire men in quantity. There is 
predominately represented in the remaining unplaced group a good, better than 
average, unskilled factory type. They have everything to offer an employer 
who is willing to spend some little time breaking them in on any ordinary 
operation. However, when the employer states that he will hire nothing but 
men already skilled in one of his operations, the remaining group has little 
to offer. If either local aviation company were hiring at this time, there would 
be no problem. 

Today the writer asked both aviation companies what might be looked for in 
the immediate future. Neither reply was encouraging. At the Bell plant the 
second shift on wing assembly is still discontinued and the work manager 
advises that very few additional workers will be added in the next month. 
Curtiss employment officials paint a similar picture, explaining that moving to 
the new plant has disrupted production and, until efficient production can be 
reestablished, they will add no additional help. There seems to be no hope 
at present that Curtiss will hire numbers of men during September. On the 
other hand, both Bell and Curtiss are using former General Motors workers in 
every opening possible. We are with some success, referring these workers daily. 

The Worthington Pump Co. was able to use only two of the men we referred, 
after their preliminary selection from our records. They state, however, that 
there is a definite possibility that they can and will accept quite a number (prob- 
ably 50) in about 1 month, to replace men who will complete on the job training 
at that time. 

There seems to be no question as to the desire and willingness of the em- 
ployment representatives of Curtiss, Bell, and Worthington to cooperate— they 
simply have not received orders for workers from the plants. 

On Wednesday we received our first order, from the Buffalo Arms Corporation, 
on which it was possible to refer General Motors workers. The order called for 15 
experienced milling machine operators. Ability to set up or read micrometers 
was not necessary. Several of the first group referred were rejected for various 
logical reasons and we immediately replaced those rejected with new referrals. 
We have as of today referred all those whom we feel qualified, or a total of 
24. Upon checking with Mr. Rindge, personnel manager of the Buffalo Arms 
Corporation, this morning I was advised that 1 man had been placed in em- 
ployment, 9 had been accepted and were being held for job openings as they 
arise in the very near future. Several others had apparently not yet filed formal 
application in spite of our referral and 4 others had passed the entrance tests 
but the result of the physical examination was not yet known. 

Fraiddy, the results attained were more favorable than we had anticipated. 
We confiilently expected that most of these men would be rejected. We will 
give you final' results as to the number of placements in our next report. 

On Thursday Mr. Rindge addressed a letter to me stating he had need for 
44 workers of various highly skilled types such as turret lathe hands, internal 


grinder hands, planer hands, etc. For all these openings, he demanded fully 
qualified hands, able to set up from prints, etc. I immediately advised Mr. 
Rindge bv phone and by confirming letter that while we would be glad to work 
on tlte order, we would, I believed, be unable to refer either General Motors 
workers or others against these openings. There are no unemployed workers of 
this type available locally or elsewhere. „ . ■, ^^ • ^- + ^-v^o* 

■ Additional returns resulting from our most recent call-m letters indicate that 
there are now 1,087 unemployed of which 935 are registered with us. There 
are IOCS employed. A total of 1,< 33 have failed to respond to any and all 
our call-in efforts and we feel justified in stating that this group is also largely 
employed or not now available. , ,, , , 4. i„„„i 

We have to date referred 1,082 former General Motors employees to local 
training schools but only 674 appeared for assignment^ to classes, school officials 

^^As of Thursday, when only 1,028 General Motors workers had been reported 
placed in employment, the break-down of employees of that number was as 
follows : 

Bell ^00 

Curtiss -^^^ 

Buffalo Arms ;^ 

Worthington J-^ 

Other companies '^^^ 

Total 1'^^ 

Let us have your suggestions and criticisms. We believe that everything 
possible is being done at the local level. Any assistance you may be able to give 
will be most welcome. 

Septemeeb 5, 1941. 

Inventorving the results of the first month's effort to place displaced General 
Motors workers, leads us to the unchallengeable decision that the only organiza- 
tion in our city exerting real effort to attain the goal is the New York State 
Emplovnient Service. 

It is still true that certain of the companies are cooperating and are hiring 
some General Motors workers. We question, however, whether in any instance 
a man has been hired because he is a General Motors man. We do not believe 
that the bai-s have been lowered even slightly to permit one of these workers to 
qualify for any opening any of the four companies might have. 

There have been so far but few tangible favorable results from the viewpoint 
of the General Motors workers. First and most important was obtaining the 
agreement of the four companies to discontinue hiring practices prejudicial to 
General Motors workers. Secondly, there was the mass registration and the 
attendant referral to defense vocational schools. Thirdly, we have religiously 
hounded the four companies and others for openings into which the men might 
be fitted and we have given every possible preference ,to General Motors workers 
in resultant refi^rral. All of this has, of course, reacted favorably. The men 
appreciate our efforts and believe that we have given them preferential handling 
throughout. They know that we cannot manufacture openings but they uni- 
formly agree that without exception, those who have landed jobs have done so 
because they were fully qualified. 

Something more must be done— these men are not being employed rapidly 

At least three of the four employers could absorb more of these men, if 
pressure could be brought to bear on them. An analysis of the hiring done 
bv these companies would, we know, reveal the fact that only a small per- 
centage of all employees added are General Motors workers. We do not 
claim that these men can measure up to the employers' requirements for all 
of the job openings they have, but we can, from our knowledge of the com- 
panies' employment needs, state that if they .were inclined to lean backward 
only a little, many more General Motors workers would have been absorbed, 
and additional numbers would go to work in the near future. 

In further reference to the Buffalo Arms order for 15 milling-machine opera- 
tors, which order was received and against which 24 men were referred last 
week, we can now report that only 3 General Motors men were hired. This is, 
of course, not satisfactory. We have had no report of additional openings 


from this concern to which we might refer former General Motors employees. 

Likewise, we have had no orders from the Bell Aircraft Corporation, al- 
though that company reports that additional General Motors workers have 
been hired during the week at their gate. JMr. Gunderson, employment man- 
ager of the Bell Aircraft Corporation, examined the General Motors registra- 
tion files on Wednesday and assures us that when he obtains an order from his 
shop which will permit the employment of the type in that file, he will call u-s. 

The Worthington Pump Co. has no need for more employees now and antici- 
pates none for about 1 month. As previously stated, we believe that company 
can help but very little because of the nature of its employment needs. 

The Curtiss Co., during one of my routine calls at about B p. m. on Wednesday 
of this weelc, advised that they had 70 openings for men who had 5 to 10 
years' mechanical experience of almost any kind, such as machine operation, 
automotive experience. Of the use of hand tools. We promptly advised tliem 
that the order could be filled with General Motors men and immediately r-ent 
90 former General Rlotors workers police call messages. When we advised the 
Curtiss Co. at 11 on the following day that 45 men were already enroute to their 
plant, we were told to send no more since much of the order had been filled 
through selection from among the unemployed who had visited the company's 
employment office, and from applications on file. 

Obviously, some benefit accrued to General Motors men through our efforts 
in this case; but we insist that if this company had desired, the entire seventy 
jobs might weU have been filled by General Motors men. This is only one of the 
many examples which lead us to the conclusion that something more must be 
done' and we must have some additional help. The companies must be reminded 
by someone besides the writer, that they are expected to live un to their com- 
mitments. An examination of job openings filled by other than General Motors 
workers in any of the plants would be interesting and would quickly and con- 
vincingly substantiate our opinions. 

It must be remembered that the writer as manager of the New York State 
Employment Service industrial ollice, is in a difficult position in this assignment. 
It is not, we believe, advisable for us to antagonize any of the companies— hence, 
we can only continue to use every means at our command, short of- threats, to 
encourage employers to consider dislocated General Motors workers for every 
possible opening. 

September 12, 1941. 

There have been no new developments during the past week in the General 
Motors displaced-worker situation. Our records indicate that 1,213 employees 
are now reemployed. Eleven himdred and ninety-nine are not yet working and 
the status of 821 displaced workers is unknown. 

We do not believe that there is any discrimination at this time against these 
workers. On the other hand, there has been no apparent Inclination on the 
part of any employer to give them preference in employment of any kind. We 
are continuing to refer these men to every employment op3ning in which there 
is a possibility of placement. As pointed out previously, the majority of the 
men who remain in our files as unemployed do not have skills, hence, their 
placement presents quite a problem. Further, by and large, these men are not 
willing to accept the average beginning factory employment position which 
further complicates their placement. 

During the past week we referred all of the remaining unemployed whose 
records show mechanical background of several years, to the Curtiss Aircraft 
Corporation, where they were considered for employment in the panel depart- 
ment. The results of these referrals are not yet available. We believe, how- 
ever, that the placement of perhaps 50 former General Motors workers will 

Within the next week or 10 days most of the workers who signed up for 
national-defense training classes will have completed their 5 or 6 weeks of 
training. Unless local companies can be encouraged to employ these men in 
preference to any others, it will be impossible to promptly place all those who 
complete their training. 

We have had no further orders from either the Bell Aircraft Corporation, 
Buffalo Arms Corporation, or Worthington Pump Co. covering positions to which 
these workers were referrable, with the exception that Bell has utilized about 
15 of these men within the p'ast week. 

A i-epresentative of the General Motors Congress of Industrial Organizations 
local is in constant attendance in our office and we believe that the local is con- 
vinced that every possible effort is being put forth by this office in the placement 


of their workers. They are, however, quite concerned over what they term the 
"failure of the four companies to employ General Motors workers as promised." 
Tliey concur in our opinion that employers are not discriminating against their 
members, however. 

The prospect for the future does not appear too bright. Our orders from the 
aviation companies are invariably for men who have had a background of auto- 
motive repair or other mechanical experience. We have, we believe, practically 
exhausted the supply of this type of worker in the group. We do not believe 
that it will be possible for local industry to absorb the machine-shox) graduates 
which should be available within the next 2 weeks. Considering the small num- 
ber of aviation trainees who have been absorbed by aviation companies recently, 
we are of the opinion that General Motors woikers who have entered aviation 
training classes can also not hope to be emiployed immediately upon graduation. 

Any constructive criticism or suggestions will be heartily appreciated. 

September 19, 1941. 

There are now, according to our records, still 1,188 unemployed General 
Motors workers. Twelve hundred and seventy-five are employed and the 
status of 881 is unknown. There has been no increased acceleration in the 
rate of absorption of these workers. Unless special arrangements can be 
made with local employers (particularly Curtiss, Buffalo Arms, and Bell) to 
give the unplaced workers preferential consideration, we can foresee no great 
increase in the rate at which these people will return to work. 

This situation is, we believe, coming into a very critical stage. The local 
defense schools will, within the next few days, release for placement several 
hundred General Motors men who will have had 5 to 6 weeks of defense 
training. Tliese men confidently anticipate prompt placement — and there will 
by no means be a sufficient number of openings to which to refer them unless 
local employers grant preferential hiring. On the other hand, if these men 
are given first consideration for all openings, pai-ticularly by the "cooperating 
four," the problem will be solved. 

We have to date received information from the national-defense school 
authorities that approximately 35 former General Motors men have completed 
their training. None of the four companies when advised by the writer of 
the availability of these graduates were, they advised, in a position to use 
these men. All of them agreed that the additional training would undoubtedly 
be an invaluable asset to the men in rounding out their experience and each 
of them promised to consider these men for all possible future openings. 

In an effort to promptly place these men we immediately contacted every 
local employer of any size who might be in a position to absorb some of them 
regardless of the nvimber. This drive has met with some success. We have 
placed six machine-shop graduates with one employer and are working on 
several orders for lesser numbers. While the problem of placing 35 trainees 
can well be handled, we cannot help but be perturbed over the problem which 
faces us when suddenly in the next few days several hundred defense gradu- 
ates are handed us for placement. We do not believe, in any event, that 
all of the machine-shop ti'ainees, for example, will be placed as machine 
operators even though the fullest cooperation were had from the ff)ur em- 
ployers. However, we feel that the majority of them, with the full cooperation 
of the companies, will be placed in jobs of higher classification than would 
be possible if they had not had the defense training. 

In substantiation of this viewpoint, the Curtiss Co. has stated that they 
believe these graduates would undoubtedly fit into their panel department 
wherein the previous specifications called for several years of such work as 
"auto mechanical, machine shop or work entailing the use of small tools." If 
the Curtiss Co. can now be convinced that preference must be given to the 
graduates in all openings of this kind, it will result in the placement of at least 
200 of these workers in the very near futin-e. We believe that a close check 
of the openings filled by the cooperating employers would conclusively indicate 
that many of the openings could reasonably be filled by these men. 

We understand that Mr. Eric Nicol, Executive Assistant to Mr. Hillman, and 
Mr. S. Park Harmon, of the Social Security Board, will be in this office on 
Monday morning and will endeavor to assist us in selling employers on the 
proposition of full cooperation. If their visit has the anticipated results, the 
placement of several hundred General Motors workers should follow promptly. 

September 26, 1941. 

For the benefit of those to whom this report is directed who may not be ad- 
vised, Mr. Erie Nicol spent Monday of this week in Buffalo and visited the Cur- 


tiss-Wright Corporation, the Bell Aircraft Corporation, and the Buffalo Arms 
Corporation. No visit was made to the Worthingtou Pump Co. since that com- 
pany is not going to be in a position to hire General Motors workers or others 
in any number, and is fully cooperative. 

The Curtiss Co. advised that it will employ 200 General Motors workers be- 
tween the date of Mr. Nicol's visit and November 1. The Buffalo Arms Cor- 
poration promised to take 83 of these men during the same period. The Bell 
Aircraft Corporation promised full cooperation but due to the fact that they 
are now almost fully manned, could make no definite commitment as to the 
number they would be able to employ. We have had no call from any of the 
cooperating companies during this week. 

Our records as of this date show that 1,177 are still unemployed. As pre- 
viously pointed out, however, we believe, from the fact that call-in of these 
workers brings us only about two-thirds of the number called, many of those 
who are in our active file are already employed. We are, therefore sending 
questionnaires to all those in our active file and before next week's report is 
transmitted, we should have a completely accurate record of the employment 
status of General Motors workers and our active file should decrease by per- 
haps 2.5 percent. 

We are continuing the referral of graduate trainees to other than "the four" 
with some success. If General Motors workers were willing to accept beginning 
factory employment, their placement in local industry would present no problem. 
Generally speaking, these men are not willing to accept this type of work. We 
have discussed this matter with union representatives who are in constant 
attendance in our office, and while they feel that their co-members should accept 
employment offered, while at the same time continuing national-defense training, 
the efforts of these union representatives to recruit workers for the unskilled 
jobs have been fruitless. 

The school department has not yet turned over to this office records covering 
lai-ge numbers of graduates. We have requested the school department to send 
us an up-to-the-minute report of the status of General Motors trainees and 
next week's report will advise you of the exact number accepting training in 
each course of study. 

0CT0BB31 3, 1&41. 

Only one of the four local employers committed to cooperate in the return 
to employment of displaced General Motors workers, has placed an order with 
us for these men since Mr. Nicol's visit of September 2-1 — the Bell Aircraft 
Corporation. Because of an unanticipated pick-up in their machine shop we 
have been able to refer to this company all General Motors employees who 
have had sufficient machine shop praciice instruction in defense schools. 

This order will result in the referral of approximately 70 General Motors 
men. The Bell Aircraft Corporation is accepting for employment trainees who 
have had 200 hours of instruction or those who have the approval for place- 
ment of their instructors, even though the hours of training are considerably 
less. Not all of these unemployed men are willing to accept the conditions of 
employment offered by Bell. To date 17 refused the employment on the basis 
of insufficient salary. A few others have refused because the employment 
offered in their case was night work. The starting rate is 50 cents per hour 
increased to 65 cents per hour at the end of the first month and to 70 cents per 
hour at Ihe end of the fourth month. Forty-eight hours of employment are had 
each week in the departments to which these men are assigned. 

We are particulai'ly pleased as are the local Congress of Industrial Organiza- 
tions officials that we are in a position to offer employment to the entire group 
of machine-shop trainees. It is an added indication of the willingness of the 
Bell Co. to cooperate in the problem. 

The Curtiss Co. reports that approximately 10 General Slotors workers have 
been hired since September 24. The employment office advises us, however, 
that they expect an order for 200 workers from the plant during the coming 
week and they hope to fill many of these openings from the General INIotors 

The Buffalo Arms Corporation reports that no General Motors workers have 
been added to their pay roll since Mr. Nicol's visit. 

We sent questionnaires to all displaced General ISIotors workers in oiir 
active file late last week advising that unless the questionnaire were returned, 
we would assume the workers interested were employed or unavailable for em- 
ployment. On this basis we have cleared the active file to the point where we 
now have but 527 active General Motors cases. One hundred and sixty-two 


persons reported that they were working. Three hundred and fifty-one ques- 
tionnaires have not been returned. We believe that the number of unemployed 
General IMotors workers can now be estimated at approximately 600, since 
questionnaires are continuing to dribble in. Included in this group of 527 are 
approximately 50 already referred to the Bell Aircraft Corporation and an 
additional 25 who will be referred on the present order. 

We now have an up-to-date report of the status of General Motors trainees. 
The school department reports that there are now in attendance 214 totally 
unemployed former General Motors workers. This figure does not include 
those accepting supplementary training while employed. The training received 
by the people includes other than machine-shop practice — aviation engine, weld- 
ing, airplane fabrication, riveting, assembly, etc. 

During the week William L. Genske, of Detroit, an United Automotive 
Workers official and a member of the National Defense Employment Commit- 
tee, visited Buffalo and held a meeting with Buffalo area officers of the Con- 
gress of Industrial Organizations-United Autotmotive Workers. The purpose 
of the meeting as stated by Mr. Genske, was to "lay the ground work for the 
application of a plan evolved jointly by representatives of Office of Production 
Management and labor," in Buffalo. Also, the meeting resulted in the selec- 
tion of a committee comprised of local union members. We question whether 
much will be done locally to effectuate the Michigan plan in this city. At no 
time during the meeting was dissatisfaction expressed with the handling of the 
local situation on -the part of the State employment service. However, con- 
siderable displeasure is shown by union officials toward the Curtiss Co. and the 
Buffalo Arms Corporation. In their opinion, these companies are not cooperat- 
ing. The writer does not entirely agree so far as the Curtiss Co. is concerned. 

October 10, 1941. 

There has been very little activity in the General Motors displaced worker 
picture during the past week. Our records now indicate that a total of 3,343 
have been laid off. There remains in our active file 598 workers totally unem- 
ployed and registered for work. 

During the past week the Curtiss Co. added 14 for a total of 24 since Mr. 
Nicol's last meeting with the officials of that company on September 24. 

The Buffalo Arms Corporation reports that 5 of these men have been hired — 
these are the first to go to work for that company since Mr. Nicol's visit. 

We have completed the referral of all General Motors machine-shop trainees, 
recommended as ready for placement by the school authorities. Sixty-eight 
men were referred to the Bell Aircraft Corporation and to date we have had 
verification of 33 placements. A few placements are pending and the balance 
represents, for the most part, those who have refused the employment on the 
basis of the 50-cent-per-hour rate. 

The Buffalo Arms Corporation called early this week to advise that they 
intended raising the beginning wage of General Motors men from the previous 
45-cent-per-hour rate to 62% cents per hour. We have sviggested to them that 
we be permitted to refer the workers who refused the Bell employment at 50 
cents per hour. We have not yet had permission to make this referral. The 
five accepted by the Buffalo Arms were also selected by that comiiany from 
applications on file in their employment office. Apparently, they make quite a 
thorough investigation of each individual before considering him and therefore 
hesitate to permit us to refer these workers to them. 

If the commitments made by the Curtiss and Buffalo Arms Cos. during Mr. 
Nicol's last visit are to be lived up to, exceptional General Motors hiring 
activity will have to be shown by these companies in the almost immediate 
future. We seriously question that the commitments will be carried out. 

We still are of the opinion that a study of the employment records of at 
least two of the four would reveal the fact that if the full cooperation of these 
companies were given, the problem of placement of displaced General Motors 
employees would evaporate. 

October 17, 1941. 

So far as we can definitely determine not a great number of ex-General Motors 
workers have found employment during the period covered by this report. 
We have, however, been able to refer national machine-shop course 
graduates to the Buffalo Arms Corporation for the first time. The order for these 
workers was an aftermath of a call made to Mr. Nicol by Mr. Peo of the Buffalo 
Arms Corporation in which Mr. Peo stated that there were, he understood, "only 


40 displaced General Motors workers remaining unemployed in Buffalo out of 
vrliich they bad been able to bire but 4." 

Mr. Nicol promptly called Buffalo to check ou the statement and we called 
Mr. Gray, personnel manager of Buffalo Arms, to remind bim tbat there were 
some tOJ ex-General Motors workers still to be placed and tbat we still were 
awaiting permission to refer those who had completed the machine-shop prac- 
tice course. (Reference to Buffalo Arms' unwillingness to permit us to refer 
these workers was made in last week's report.) Mr. Gray stated tbat ap- 
parently Mr. Peo had misunderstood the figures and then agreed that we 
might refer all available machine-shop pi'actice graduates which we have done. 
As of today we have referred a total of 20. A few more will undoubtedly be 
sent in from the vocational schools and will be referred promptly. The Buffalo 
Arms Co. is not yet in a position to advise the results of the referral which 
began only yesterday morning. 

The Cartiss Co. reports that "approximately 16" displaced General Motors 
workers were added to their pay roll during the period, making a total of 40 
added since Mr. Nicol's visit to Buffalo. 

The Bell Aircraft Corporation is now adding few workers and therefore, 
only a scattered few General Motors people. We repeat our last week's state- 
ment that the commitments made by the companies upon the occasion of 
Mr. Nicol's last visit to Buffalo cannot possibly, it seems, be lived up to. 

Since there still remain 590 unemployed General Motors workers still to 
be placed and since the "cream" has already been placed, the problem of 
placing the balance is an extremely difficult one. This is particularly true 
since the remaining unskilled persons are not willing to. accept average factory 
employment. We believe these workers should in some manner be encouraged 
to accept beginning factory employment available in this city. Their experience 
qualifies them for no other employment at this time. Several representatives 
of the union feel as we do. It seems, however, that the impression is prevalent 
among the workers that they will receive employment on a parity in wages 
with that which they enjoyed at the General Motors plants. 

As previously stated on several occasions, merely because of tlie attitude 
of these workers, their referral to average factory beginning employment has 
been anything but satisfactory. We believe this matter is worthy of the 
attention of all interested parties since otherwise the placement of the balance 
of these people is practically impossible, at least until the General Motors 
plants reopen in Buffalo. 

OCTOBEE 24, 1941. 

There has been no activity to speak of in the placement of displaced General 
Motors workers during the past week. We can foresee no activity of importance 
in the inuuediate future. Our active file of unemployed now totals 566. 

The Buffalo Arms Corporation reports that 21 of these men have been hired 
by them since October 16. This is the largest number taken by the company in 
any comparable period. However, we do not expect that they will be able to 
continue employing at this rate, particularly because the people still remaining 
unemployed are not the type in which Buffalo Arms is interested. They have 
interviewed every unemployed General Motors worker who has completed a de- 
fense training course in machine-shop practice and have apparently no desire to 
interview those who have not had this training. 

The Curtiss Co. in their telephonic report of this morning advises that they 
have added a total of 30 since Mr. Nicol's last visit. This number, by the way, is 
one less than that reported last week. The employment manager points out that 
their hiring has been restricted to the employment of skilled mechanics and the 

It does not appear that we can expect much fi-om the Bell Aircraft Corporation. 
The employment manager of that company advises that they face a lay-off of 
300 workers due to the shortage of motors and propellers. 

Employment activity in this city as a whole is down considerably from pre- 
vious weeks. This is, we believe, to be expected in view of the lay-offs encoun- 
tered in several of our larger industrial organizations. These lay-o'ft's will, of 
course, have an unfavorable effect on the future placement of the displaced 
General IMotors workers since those remaining to be placed have no particular 
skills to offer and the caliber of workers laid off by other companies now releas- 
ing workers, is at least as high as that possessed by General Motors unemployed. 

October 31, 1941. 
There has been little opportunity to refer General Motors displaced workers 
during the past week. There are several reasons for this : First, none of the 


cooperating employers are hiring in any quantity and, secondly, as previously 
pointed out, the General Motors workers still in our active file do not have 
the skill or training required by local employers who may be in the market 
tor men, and, finally, there have been quite extensive lay-offs locally. 

The active file of displaced General Motors workers is 588 as of today. 
Although the remaining workers represent those workers with the least skill, 
this office has made a total of 354 referrals covering the group. This is an 
indication that an effort has been made to place these people. It must also 
be remembered that very few of the General Motors displaced workers have 
been willing to accept referral to beginning factory employment. If this were 
not true, the total number of referrals would be considerably higher. Also, 
had these people been willing to accept beginning factory employment, we 
would not today have anywhere near the present number of unemployed to 
contend with. 

Mr. Addis believes that these workers should accept the beginning factory 
jobs offered by this office. Mr. Sayen, Buffalo C. I. O. representative who is 
in close touch with the local situation, concurs. We have pointed out to 
Mr. Sayen that even though these people now decide that they are willing to 
accept this type of work, their placement will prove quite difficult in view of 
the slackened hiring. 

In view of the above referred to lay-offs affecting upward of 1,500 workers, 
which lay-offs have been occasioned by the shortage of materials, we question 
whether it is advisable to continue to handle the displaced Chevrolet workers 
as a preferential group. We wonder whether it might tend to place all con- 
cerned in an embarrassing position. 

The Buffalo plan, which originated to give preferential consideration to work- 
ers displaced by the conversion of the local General Motors plants to aircraft- 
engine production, has been in effect since August 7, 1941. On November G, 
Mr. S. Park Harman, Chairman of the Regional Labor Supply Committee of 
the Office of Production Management, called a meeting in Buffalo to consider 
the status of the plan. It was the consensus of the meeting that the Employ- 
ment Service submit to all interested parties a final report summarizing the 
results of the plan. This summary is contained in the three paragraphs fol- 
lowing : 

Of the 3,345 workers laid off, but 571 are unemployed and seeking work 
through the New York State Employment Service. 1,707 of the remainder 
are known to be working. 440 who dropped out of the plan and 463 who 
never entered the plan are assumed to be working. The assumption is 
based on the fact that those workers entitled to unemployment insurance 
benefits did not claim benefits or draw to exhaustion. The additional 164, 
in response to letters, stated that they were vmemployed but did not enter 
the plan nor did they draw unemployment insurance benefits. 

Thus 2,610 (78 percent) are known or reasonably assumed to be working. 
571 (17 percent) are known to be unemployed, and the present status of 
164 (5 percent) cannot be definitely determined. 

Work opportunities were offered to more than 300 of the 571 unemployed 
persons, but either the worker was not entirely acceptable to the employer 
or the opportunity was not acceptable to the worker. Only 121 of this 
group are presently enrolled in national defense training courses. The 
courses in which most of them are enrolled will prepare them for employ- 
ment in the converted motor plants rather than for work opportunity else- 

It was also agreed at this meeting that additional lay-offs, now numbering 
approximately 2,200, by other local industrial plants facing problems of material 
shortages or of conversion to defense production, make necessary the consider- 
ation of a more comprehensive plan to afford to all displaced workers employ- 
ment opportunities in local industries. 

The current labor market situation was reviewed especially with respect to 
immigration of workers from other communities and other States. It was the 
sense of the meeting that local displaced workers should have preference over 
migrants coming into the community and that steps should be taken to formulate 
and implement a plan to effectuate this ob.1ective. Officials of the Regional 
Labor Supply Committee of the Office of Production Management are now 
studying these problems. 



San Diego Exhibit 29. — Survey of Housing and Migration 

(On the following pages appears the second report of a survey made 
by the Consolidated Aircraft Corporation, of San Diego, Calif. The 
first report, covering 475 applicants for work who were questioned at 
random in the company's employment office during the week ended 
August 1, 1941, was received too late for inclusion in part 12, San Diego 
hearings, and was therefore published as "San Diego Exhibit 28" in 
part 17, Washington hearings.^ The material that follows was based 
on a continuation of this survey, covering 500 applicants, during the 
week ended September 20, 1941.) 

San Diego Exhibit 29. — Survey on Housing and Migration Conducted at 
Consolidated Aircraft Employment Office Among Applicants Applying 
FOR Work, Week Ending Sept. 20, 1941 

report by consolidated aircraft corporation, SAN DIEGO, CALIF. 

Table 1. — Age, marital status, dependents, period of residence, and housing 
situation of applicants for icork at Consolidated Aircraft Corporation, week 
ending Sept. 1, 19Ifl 


Number in sample 

Age of applicant 

18 through 20 years. 
21 through 27 years. 
28 through 35 years. 
36 through 49 years. 
50 years and over. . . 

Marital status: 



Number of dependents. 





Four or more 

Time in California: 
One week or less... 






age of 

2 31 

3 47 










24.9 years.i 


Time in California — 
One week to 1 year. 
One year or over... 
Time in San Diego: 

One day 

Two days to 1 week. 

Week to 1 year 

One year or more .. 
Applicants seeking 
housing accommoda- 

Koom and board. . . 
Houses or apart- 

Applicants not seeking 
housing accommoda- 





age of 























• This figure shows applicants 1 year and 4 months younger than those shown in report of the survey^for 
the week ended Aug. 1, 1941 (see pt. 17, Washington bearings, p. 6969.) 
' Too young for draft. * Deferred under new law. 

' Age groups from which draftees are selected. ' Above draft age. 

Table 2. — Last previous States of residence of applicants seeking employment with 
Consolidated Aircraft Corporation, week ending Sept. 1, 19^1 

border states 

Kentucky 3 

Missouri 26 

Oklahoma 60 

Tennessee 2 

West Virginia 2 

Total, 18 percent 93 


Iowa 22 

Kansas 22 

Minne.'^ota 18 

Nebraska 14 

North Dakota 9 

FARM STATES — contmucd 

South Dakota 10 

Wisconsin 6 

Total, 20 percent 101 


Illinois 20 

Indiana 5 

Michigan 5 

Ohio 3 

Total, 7 percent 33 

^ So(5 te.stimony of Maj. Edpar N. Gott. vice president. Consolidated Aircraft Corporation, 
and Hormm R. Wiseman, personnel administrator. Consolidated Aircraft Corporation, San 
Diego liearinss, pp. 4848-4859; and San Diego Exhibit 28, pt. 17. Washington hearings, 
pp. 69G7-6970. 



Table 2. — Last previous States of residence of applicants seeking employment with 
Consolidated Aircraft Corporation, week ending Sept. 1, li)Jfl — Continued 













Total, 20 percent 100 


Arizona 11 

Colorado 12 

Idaho 6 

Montana 4 


New Mexico 





Wyoming 7 


Massachusetts 1 


California 1 

Oregon 110 

Washington 2 

Total, 23 percent 113 


New Jersey . 1 

New York 4 

Pennsylvania 3 

Maryland 1 

Total, 2 percent 9 

Grand total 500 

Total, 10 percent- 


Table 3. — Percentage of employees of Consolidated Aircraft Corporation bom 
in each State, November 17, 19Ifl 

State of birth ; Percent 

California 11. 4 

Texas 11. 1 

Missouri 7. 3 

Oklahoma 6. 7 

Kansas 5. 7 

Illinois 5. 4 

Iowa 4. G 

Nebraska 4. 3 

Minnesota - 4. 2 

Arkansas 3. 1 

Colorado 2.8 

New York 2. 8 

Foreign countries 2. 5 

Arizona 2. 

Ohio 2. 

Pennsylvania 2. 

Wisconsin 1. 8 

Massachusetts 1. 5 

Utah 1. 5 

Washington 1. 3 

Indiana 1. 3 

Michigan 1. 3 

South Dakota 1.2 

New Mexico 1. 1 

North Dakota 1. 1 

State of birth— Continued. Percent 

Idaho 1. 

Oregon 1. 

Louisiana . 8 

Montana . 8 

Tennessee . 8 

Wyoming . 8 

Kentucky . 6 

Mississippi . 6 

Connecticut . 5 

Alabama . 4 

Maine . 4 

Maryland . 4 

New Jersey . 4 

North Carolina . 4 

Georgia . 3 

Rhode Island . 3 

West Virginia . 3 

Florida . 2 

Nevada . 2 

Virginia .2 

South Carolina . 1 

Vermont . 1 

District of Columbia . 07 

New Hampshire . 07 

Hawaiian Is'.ands , 04 

Table 4. — Percentage of employees of Consolidated Aircraft Corporation by States 
in which they were last employed, Nov. 17, 19^1 

State last worked: Percent 

California 45. 5 

Texas 8. 3 

Missouri 4. 5 

Illinois 3. 6 

Kansas 3. 5 

State last worked— Continued. Percent 
Oklahoma 3. 3 

Arizona 2. 3 

Iowa 2. 3 

Minnesota 2. 3 

New York 2. 2 



Table 4. — Percentage of employees of Consolidated Aircraft Corporation by 
States in tcJiich they were last employed, Nov. 11, 19Jfl — Continued 

State last worked— Continued. Percent 

Nebraska 2. 






New Mexico--. 




Washington — 





South Dakota. 

State last worked— Continued. Percent 
Maryland 0. 4 


New Jersey 

North Dakota 

Rhode Island 

U. S. Army 

U. S. Navy 





North Carolina 



West Virginia 


Dist. of Columbia- 
Hawaiian Islands- 
Canal Zone 


Table 5 — Length of time in California of employees of Consolidated Aircraft 
Corporation,^ November 17, 19^1 

Percen t 

Up to 6 months 34. 9 

7 to ] 2 months 9. 9 

1 to 2 years 14. 


2 to 3 years 3. 5 

3 to 5 years 5. 4 

Over 5 years 32. 3 

"The average length of time in California of employees of Consolidated Aircraft Cor- 
poration is 6 years and 4 months. 


Allocations (see also Defense production; Supply Priorities 

and Allocations Board) : Page 

Copper curtailment order, effect of 8151 

Factors considered in making- 81^2 

Industries affected by 8151 

Surveys of communities affected by 8152 

Policy, Supply Priorities and Allocations Board 8029-8031 

Army and Navy : 

Cooperation with Office of Production Management 8090, 


Determination of defense requirements 8021 

"Farming out" of contracts {see also Defense contracts — 

subcontracting : 8046-8047 

Legal limitations on procurement 8087 

"Legalistic attitude" toward procurement 8070-8071 

Placement of purchase orders by 8024 

Procurement methods 8045-8046 

Procurement policies, suggested changes 8076-8077 

Responsibility for defense production 8050-8051 

Retention of managerial responsibility on defense con- 
tracts, advocated 8047-8048 

Automobile industry; labor policy agreements 8192-8195 

Buffalo plan : 

Discussed 8141-8146 

Intangible accomplishments of 8146-8147 

Official report on 8197-8207 

Press release on 8184-8185 

Results obtained 8148 

Bureau of Employment Security : 

Registration at offices of 8114 

Reports of lay-offs 8139 

Business men (see also Small business) : 

Nondefense clinics for, suggested 8028-8029 

Responsibility and opportunities under defense pro- 
gram 8018-8019 

Certification of communities &'152-8]53 

Civil Service Commission: Roster of industrial engineers 8069 

Clearing centers : 

Distinguished from "pools" 8073 

For excess production facilities 8072-8073 

Community surveys 8152 


8212 INDEX 


Congress of Industrial Organizations. {See United Automobile 
Workers — Congress of Industrial Organizations.) 

Conservation Order No. M-9-c 8151 

Consolidated Aircraft Corporation : Survey on housing and 
migration of applicants to 8208-8210 

Contracts. {See Defense contracts.) 

Conversion. {See Defense conversion.) 

Defense contracts {see also Defense production; Office of Pro- 
duction Management) : 

Analysis of allocations, by regions and States 8122-8123 

Apportioned by Contract Distribution Diviison 8017 

Central subcontracting system for, advocated 8091-8092 

Channelization of distribution 8140-8141 

Costs of improper distribution of 8026 

Development of the directive for 8138 

Distribution methods 8149 

"Exploding" for subcontracting 8050, 8071 

Importance of follow-up procedures 8047-8048 

Management engineering units advocated 8050 

Pooling of facilities for 8048, 8081 

Prime contractor control in 8047 

Ratio of amounts let to appropriation 8078 

Eeexamination of completion dates, to speed produc- 
tion 8025-8026 

Speed-up methods 8079 

Subcontracting : 

German methods and experience 8056-8068 

Gun parts to nonmilitary manufacturers 8049 

Importance of, in production _. 8047 

Support of Government agencies required 8047 

Defense conversion {see also Great Britain) : 

Coordination of demand and supply essential 8019 

English experience 8082 

Extent of utilization 8084-8085 

Extent of plant availability 8043-8044 

Governmental assistance in 8152 

Machine adaptability ■ — 8023 

Unsatisfactory progress charged 8023-8024 

Utilization of existing capacity 8075 

Utilization possibilities^ 8084-8085 

Defense migration. {See Migration.) 

Defense production {see also Great Britain) : 

All-out program required for 8036-8037 

Capacities for, not used 8035-8087 

Civilian direction suggested 8025 

Democratic efficiency challenged in 8038 

Extent of excess capacity 8043-8044 

Integration of control policies 8088-80S9 

Hampered by procurement methods 8045 

Knowledge of tptal requirements necessary 8020-8021 

Metalworking industry 8074-8075 

Pooling of facilities for 8073, 8083, 8084 

Principal deterrents to 8106-8107 

i^DEx 8213 

Defense production — Continued. ^^se 

Kelationship between Government and its suppliers 8051 

Summary of suggested program for 8093-8095 

System used in England 80.")1, 8052 

Two requirements for building volume 8047-8048 

Unused capacities for, estimated 8050 

Utilization of engineering skills required 8051-8052, 8069 

Utilization of excess capacity 8080,8081 

Dislocations. (See under Employment.) 

Employment {see also Great Britain ; Multiple shifts, National 
Youth Administration; Post-emergency planning; Work 
Projects Administration). 

Additional defense workers requirements, by industry 

and skill - 8119 

Additional defense worker requirements in relation to 

defense contracts .- 8121 

Age limits 8127-8128 

Areas of greatest defense dislocation 8124 

Concentration of labor demands analyzed 8120 

Cost of labor market survey 8147 

Defense labor requirements, anticipated ; 8118-8119 

Dislocations : 

Automobile industry 8110-8111 

Construction workers 8109,8110 

Distribution trades 8135 

Durable consumers' goods industries 8110-8111 

Extent of, by States 8114-8118 

General Motors workers at Buffalo 8197-8207 

Government responsibility in 8111-8112 

Labor policy agreement 8192-8195 

Measurement of 8134 

JSIondefense industries 8109-8111 

Practical difficulties in estimating 8134 

Present and anticipated 8111-8112 

Silk workers 8117-8118 

Spread of, based on material shortages 8111-8112 

Survey of problems of 8114 

Uneven distribution of 8135-8136 

Distribution by shifts, selected plants 8104-8105 

Duplicate registration for 8114 

Estimates, by major components, selected industries, 1937- 

41 __: _ 8097-8102 

Geographical concentration of required workers 8119 

Increased by complete use of facilities 8085-8086 

Increases : 

General Electric Co 8075 

Machine-tool plants 8106-8107 

Metalworking industry 8078 

Industries likely to be affected by curtailments 8151 

Intensity of Work Projects Administration employment 

compared to total labor force 8121 

Labor force estimates 8178 

Metalworking industry 8074-8075 

Multiple shifts {see also Multiple Shifts) 8103, 8106-8107 

8214 INDEX 

Emploj'inent — Continued. Page 

Overtime 8103, 8105, 8106 

Percent of employees on extra-shift work 8103, 8105 

Reabsorption program under Office of Production Manage- 
ment 8031-8032, 8140 

Reemployment factors 8145 

Reemployment program, automobile industry' 8149 

Shift schedule and hours per week, selected plants 8106 

Similarity betAveen contract allocations and labor require- 
ments ' 8122-8123 

Skilled and semiskilled defense worker requirements 8119 

Survey, applicants to Consolidated Aircraft Corpora- 
tion 8208-82ia 

Tabulation of additional worker requirements, by States, 

and labor force 8120 

Uneven distribution of workers between shifts— 8103, 8104-8105 
Wage earners in 18 defense industries 8102 

Employment Service : 

Buffalo plan, report by New York office 8197-8207 

Organization of Federal agency 8146 

Proportion of workers hired through 8143 

Registration in States requiring additional defense 

workers 8120 

Registrations of unemployed employables with 8128-8129 

Rslationship of Office of JProduction Management 8148 

Use of radio by 8182-8183 

England. {See Great Britain.) 

"Farming-out" {see also Army and Navy; Defense contracts — 
subcontracting; Maritime Commission) : 

Bulletins on, issued bv Office of Production Management- _ 8043 

German methods and experience 8048-8049,8056-8068 

Oerlikon antiaircraft gun 8049, 8071-8072 

Federal Security Agency {See Employment Service; National 
Youth Administration). 

General Electric Co.: Employment increases 8075 

Germany {see under "Farming out") : Bibliography on spread- 
ing of orders 8066 

Great Britain: 

Agricultural minimum wages '. 8162 

Employment and transference 8156-8160,8171-8176 

Health and welfare of workers 8160-8162, 8172-8173 

Industrial training 8157-8168,8160,8174-8175 

Labor policy and administrative method 8164-8167 

Migration 8171 

Mobilization and distribution of manpower 8154^8162 

Over-all planning 8088 

Problems of labor supply 8169-8170 

"Reservation" of skilled workmen 8155 

Social measures, changes in 8162-8164, 8172-8173 

Unemployment estimates 8169, 8170 

Women workers 8158,8161,8164-8165,8176 

Health. (^S'ee im<ier Great Britain.) 

Housing {see also under Great Britain) : Of applicants at Con- 
solidated Aircraft Corporation 8201 

INDEX 8215 


Indiana: Extent of labor dislocations in 8115-8116 

Industries affected by curtailments 8151 

Labor. {See Employment). 

Labor unions. {See L^nited Automobile Workers, Congress of 
Industrial Organizations. ) 

Little business {See Small business). 

London and Southeastern Regional Board : Composition and 

functions of 8052-8056, 8060 

Machine-tool plants: Operating schedules 8107 

Machine tools : Form used bv English clearing centers to obtain 

data on 1 8055, 8056 

Maritime Commission : 

"Farming out" of contracts 8046 

"•Legalistic attitude" toward procurement 8070-8071 

Placement of purchase orders by 8024 

Procurement methods 8045-8046 

Responsibility for defense production 8050-8051 

Material shortages: Extent of 8134 

Metalworking cajiacitv of country 8074-8075 

Migration {see also Great Britain: National Youth Adminis- 
tration) : 

Analysis of problem of 80^34 

Effect of low AVork Projects Administration employment 

on 811,0 

Increased by labor displacements 8124 

Minimized through skilled plant management 8017 

Of applicants to Consolidated Aircraft Corporation- _ 8208-8210 

Radio program to discourage 8182-8184 

Related to defense contract distribution 8039,8110 

Scheduling of plant operations, as cause of 8016-8017 

Multiple-plant corporation: Operation of 8036 

Multiple shifts {see also Employment; Wages and hours) : 

Distribution of employment, selected plants 8104-8105 

Incomplete use of 8077-8078 

Increased use in defense industries 8108 

Machine-tool plants 8106-8107 

Operating schedules 8106, 8107 

Percent of employees on extra-shift work 8044-8103 

National Youth Administration : Youth placement, show- 
ing State of origin of trainee and location of plant 8185-8191 

Navy. {See Army and Navy.) 

Oerlikon antiaircraft gun: Example of successful "farming 

r^T'^'-r^ -— 8049, 8071-8072 

Omce of Production Management : 

Conimunity certification procedures 8152-8153 

Division of Civilian Sui)})ly : Limitation programs pre- 
pared by ^ 8022 

Division of Contract Distribution : 

Apportionment of defense contracts by 8017 

Coordinate authority for production 8050-8051 

Labor Division : 

Collaboration with Division of Contract Distribution, 8152 
Community surveys 8152 

60306— 41— pt. 20 14 

8216 ^^^^'^ 

Office of Production Management — Continued. 

Labor Division — Continued. rage 

Cooperation with Employment Service 8148 

Industry's interpretation of policy statement 8193-8195 

Policy and program 8138,8139,8140,8142 

Press release of 8184-8185 

Report to, on Buffalo plan__ 8197-8207 

Sources of labor information 8134—8135 

Statement of policy issued by 8192-8193 

Training program 8152 

Machine-tool survey 803^8033 

Pennsylvania silk Avorkers: Defense dislocation of 8117-8118 

Per capita distribution of defense contracts and facilities- _ 8122-8123 
Post-emergency planning: Retraining and transference of 

labor 8177-8182 

Priorities. (See Allocations.) 

Priority unemployment. {See Employment, dislocations.) 
Procurement. (See v/nder Army and Navy.) 
Procurement of military materiel : 

Scope of an efficient program for 8039-8042 

Suggested organization for 8037-8038 

Radio, use of by Employment Service 8182-8183 

Rhode Island Industrial Commission : Clearing center for in- 
dustrial facilities 8072^ 

Roster of Scientific and Specialized Personnel: Creation and 

functions of ; 8051 

San Diego, Calif. : Survey of housing and migration in 8208-8210 

Scranton-Wilkes-Barre area. Pa. : Extent of labor dislocations 

in 8117-8118 

Shipbuilding Stabilization Committee: Four-zone standards 

set up 8043 

Silk workers. {See Pennsylvania workers.) 
Small business (see also Businessmen) : 

Allocations to 8029-8031 

Effect of defense program on 8091-8092 

German methods of "farming out" to 8063-8068 

Pooling organizations by 8084-8085 

Summary of program to speed defense effort 8093-8095 

Supplies. {See Allocations.) 

Supply Priorities and Allocations Board : 

Allocations to small business 8029-8031 

Authority of 8023, 8026 

Efficiency of surveys directed by 8027-8028 

Expediting procurement of basic commodities 8029 

Functions and policy objectives of 8017-8018, 8022, 8026 

Labor displacements attributed to construction ruling 8110 

National inventories of materials available to 8027 

Survey of national requirements 8020-8021, 8031 

United Automobile Workers, Congress of Industrial Organiza- 
tions : 

City defense employment committees : 

Functions and structure of 8195-8196 

Labor policy agreement 8191-8195 

INDEX 8217 

Vital statistics : Applicants to Consolidated Aircraft Corpora- Page 
tion - 8208 

Wages and hours (see also Employment; Multiple shifts) : 

Overtime 8103, 8105 

Shift schedule and hours per week, selected plants 8106 

Wilkes-Barre, Pa. (See Scranton-Wilkes-Barre, Pa.) 

Wisconsin : Extent of labor dislocations in 8116 

Women workers {see also under Great Britain) : Displaced in 

silk plants 8117-8118 

Work Projects Administration : 

Age of workers 8127-8128 

Certification for training courses 8130-8131 

Direct certification by 8129 

Employment, by regions and States, in relation to defense 

contracts and population 8122-8123 

Employment break-down in States requiring additional 

defense workers 8120 

Employment percentages in States requiring additional 

defense workers 8121 

Enrollments 8128 

Estimates of defense dislocations 8123 

Field reports on employment dislocations 8111-8112 

Inability to absorb displaced workers 8110,8113 

Inadequacy of aj)propriation 8125 

Recertification of defense workers 8132 

Report on extent of priorities unemployment, by 

States 8114^8118 

Road building projects^ 8131-8132 

Shift in type of projects 8113 

Summarization of labor situation by 8112-8114 

Training programs 8126-8127 

Transportation of workers to training areas 8125 

Type of construction allowed during emergency 8131-8132 


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