The Federal Government and the Wartime Economy

No economy can remain untouched by the claims of large-scale modem warfare, and the United States, like the European belligerents, saw the role of govemment swell. For example, authorities in Washington took over the operation of the nation's railroads. On December 26, 1917, President Wilson named his secretary of the treasury, William G. McAdoo, head of the federal government's Railroad Administration. With Hoover in charge of the food supply, there remained only the country's industrial system to bring, at least temporarily, under government direction. On March 4, 1918, in order to direct war production. President Wilson appointed Wall Street financier Bernard Baruch head of the War Industries Board. Armed with only limited legal powers, Baruch nonetheless got the cooperation of industry in providing goods of the highest priority for the war effort. The War Industries Board successfully put pressure on steel executives to limit prices, and it promoted measures to conserve vital commodities and freight capacity. It increased industrial efficiency by encouraging the standardization of products—everything from steel plows to baby carriages to coffins. Promoting the substitution of paper wrappers in place of pasteboard cartons and wooden boxes for civilian clothing, the board freed over 17,000 freight cars for vital wartime use. The board served as well as the purchasing agent for America's wartime partners. Its most important task was allocating scarce resources. Thus, the board induced the automobile industry to lower production of pleasure cars by threatening to cut off its supplies of coal and steel.