Such, in outline, was the system which liquidated the war industry and struck the balance between the War Department and the munitions producers. A few details of organization should be noted. The War Department Claims Board greatly expanded its own organization during the episode by creating various subsidiary bodies. One of these was its Standing Committee (composed of members of the Board), which did most of the actual work for the Board and presented its acts for the consideration of the entire Board in the form of resolutions. These resolutions in time became a body of precedents to standardize the whole procedure. To handle engineering and other technical questions, the War Department Claims Board created its Technical Section, which, in turn, established within itself its Plant Valuation Group, made up of men specially qualified to appraise the contemporary value of plants erected for the War Department by producers with the understanding that the Department would pay for these plants, or an agreed-upon portion of their cost. The Special Auditing Committee of the Board also conducted a work of great importance. During the war numerous manufacturers held contracts with two or more production bureaus of the War Department. After the armistice they filed separate claims for the settlement of such contracts. There was always danger that in these claims there would be duplicate items of such costs as overhead expense and plant deterioration. The Auditing Committee consolidated the claims of individual producers and thus enabled the War Department Claims Board to strike out duplicate items of cost. Numerous contractors followed the old peace-time procedure of filing claims with the auditor of the War Department. So many claims originated from this source that the War Department Claims Board established in the office of the Director of Finance a Classification Board to separate all claims coming to the auditor and to refer them to the proper bureau boards.
This system had nothing to do with the settlement of claims arising out of the War Department’s operations in real estate during the war. There were thousands of claims for damage done to property incidental to the training of the Army. To settle such claims the Secretary of War utilized the existing War Department Board of Appraisers, which had been created to establish the values of commandeered property. The commanders of military posts investigated the validity of real estate claims and recommended awards. These, after approval by the Board of Appraisers and the Secretary of War, were paid by the auditor of the War Department. Numerous real estate claims arose under informal and invalid agreements, and the condition of such claimants was usually particularly helpless. When the War Department started to build its great trinitrotoluol plant at Racine, Wisconsin, a large number of persons, home owners and renters, moved off the site without the formality of written contracts. Many of these individuals sold their farm animals and household goods. The armistice cut short the construction of the plant, and then the property owners discovered that they were without legal standing before the Government. The Dent Law enabled the Department to settle these and other real estate claims arising under informal contracts, and the Board of Appraisers made the settlements.
The Canadian contracts, both formal and informal, were adjusted by the Imperial Munitions Board, acting in conjunction with two American officers called assessors, one of whom was a special member of the War Department Claims Board. Mr. D. C. Jackling, the director of United States Government Explosives Plants, adjusted all the outstanding contracts and orders in connection with the construction of the Nitro (West Virginia) Powder Plant. More than 3,200 firms and individuals had received orders for materials for the plant, and a fire at the plant immediately after the armistice destroyed the records of all open orders. The terms of these orders were reëstablished by correspondence with the contractors. A special settlement board within the Ordnance Department adjusted the terminated contracts for the construction of nitrogen fixation plants authorized as a war measure. The Spruce Production Corporation of the Air Service terminated and settled its own contracts with the spruce lumber interests in the Northwest.
On July 1, 1920, the War Department Claims Board, which had conducted the liquidation of the Department’s war business (with the small exceptions noted above) ended its work and disbanded, turning over to the regular military organization of the War Department the residue and remnant of work still left. Of the 27,000 war contracts, 26,000 had been terminated and settled by the Department. There were still 995 claims pending, or less than 4 per cent of the original number; but more than half the auditing and other preliminary work on these 995 claims was done. The liquidation was therefore more than 98 per cent complete, and this in little more than a year and a half after the Government halted the mightiest industrial undertaking upon which any people ever embarked. The promptness and wisdom shown in that settlement had allowed war industry to taper off and stop without shock to the economic structure of the country, had stabilized business, relieved the banks of the country of a vast load of debt which they were carrying for the war producers, and thus had brought the nation safely and easily through what might otherwise have been the sharpest business crisis it had ever known. Concretely, in dollars and cents, this work was of great material benefit to the Government and people of the United States. The rate of liquidation of the unfinished portions of the war contracts averaged fourteen cents to the dollar—that is, the payment of fourteen cents by the Government satisfied and wiped out a contractual obligation of one dollar. At this ratio, the settlements effected by the War Department Claims Board saved the people of this country from having to pay out well over $3,300,000,000.
Photo by Harris & Ewing
THE WAR DEPARTMENT CLAIMS BOARD
Photo by Signal Corps
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