Chicago. Included northern Illinois and the band of states to the northwest as far as Montana. Produced caterpillar traction for the tanks and artillery, guns, carriages, recuperators, projectiles, and grenades; the district was also saturated with contracts for machinery for the eastern munitions plants. Chief, Mr. E. A. Russell, vice-president of the Otis Elevator Company.
Pittsburg. Included western Pennsylvania except three counties, two counties of western Maryland, two counties of Ohio, and all of West Virginia. The prime subcontract district for the production of raw steel and steel forgings. Herein was located the Neville Island ordnance plant project. Produced optical glass in quantity. Chief, Mr. Ralph M. Dravo, of Dravo Brothers, contractors, Pittsburg.
Cincinnati. Southern Ohio, Indiana, and the South. Was the chief nitrogen-fixation district and the chief producer of smokeless powder. Included Dayton, with 200 factories exclusively engaged in munitions production. Produced tanks, shell, fuses, optical instruments, and machine tools for war factories. District chief, Mr. C. L. Harrison, a Cincinnati capitalist.
St. Louis. Included southern Indiana and sixteen western states. Produced black walnut, toluol, and picric acid. Chief, Mr. Marvin E. Singleton, former president of the East St. Louis Cotton Oil Company.
After the armistice the manufacturing committees in charge of the twelve American ordnance districts became, without essential change in their organization, the ordnance district claims boards. Each board consisted of seven members—business men and at least one lawyer—with such technical assistants as they needed. The first executive act in demobilization for these boards to make was to determine what war contracts were to be terminated immediately, what ones were to be tapered off with a minimum expense to the Government and a minimum disturbance to industry and labor, and what ones were to be carried through to completion.
It was often advantageous to allow the contractors to proceed undisturbed. Some of these ordnance supplies, which would be valuable and essential items of our military equipment for years to come, were only just reaching the stage of production in the factories, after many months of costly experiment and preparation. It was obviously unwise to interrupt these projects with nothing to show for them except heavy bills of expenses. Then, too, it was sometimes of financial advantage to the Government to allow a contract to go through to completion. A contractor in the Chicago district, for example, had nearly completed the manufacture of several large machines for installation in an eastern munitions plant. To cancel the contract would have cost the Government $90,000 in a settlement and left on its hands a quantity of semi-finished materials having only junk value. The Government no longer had use for the finished machines; yet it would cost only $14,000 more to go on and complete them. This was done, and the Ordnance Department was later able to sell the machines to a private buyer for more than $100,000, thus recovering practically all the money it paid to the contractor.
To provide a basis of fact for all such acts of administration in the demobilization, the district boards first took a rapid but thorough inventory of the ordnance industrial situation. This they did by means of questionnaires sent to all the contractors. Each questionnaire, when returned to the district board, showed the status of the contract at the time and how the contractor’s business and his employees would be affected by a termination. The general ordnance policy was to permit contractors (after the first emergency suspension which, it will be remembered, had been requested immediately after the armistice was signed) to continue their work on a diminishing scale for a few weeks, while they made their arrangements to engage once more in commercial work. Some of the contracts, including all the late, standardized ones, provided for the termination of work upon thirty days’ notice. If, however, the enforcement of this provision would create any considerable amount of unemployment, the district boards allowed such contractors to complete an average thirty days’ production, but to spread out the work over a longer period of time.
There were variations of the general policy when it was applied to special classes of ordnance industry. For instance, the many contractors who were machine-finishing the artillery shell were permitted to keep their plants in full operation until January 31, 1919, when the work had to cease abruptly. All source industries—industries, that is, producing rough forgings and other raw and semi-finished materials for ordnance manufacture—were taken from war work forthwith. Then, too, as noted, in various classes of large ordnance, or ordnance of exceedingly difficult manufacture, the orders were greatly reduced and the contractors permitted to go ahead and complete the residue, no matter how long it might take. Such ordnance included gun carriages, recuperators, tanks, optical instruments, and other supplies of the sort. This reduced production continued for more than a year after the general stoppage of war industry. Some of the Mark VIII tanks (the Anglo-American design) were delivered to the Army as late as June 1, 1920.
So expeditiously was the work of termination carried on in the other classes of manufacture (and these made up the greater part of the ordnance industry) that by January 1, 1919, nearly all war ordnance production had either been terminated altogether or was dwindling to the vanishing point under specific agreements. After February 1 the only war ordnance factories in operation were the exceptional plants noted in the preceding paragraph.
Even as the ordnance industry was being stopped, the Government was coming to an understanding with the ordnance contractors as to the settlement of their claims. To this end, in most of the manufacturing districts the board members traveled from city to city, addressing large meetings of the contractors and explaining to them the general liquidation policy adopted by the War Department. In its broad outlines, this policy was as follows: The Government would take off the contractor’s hands at cost all materials which he had specifically purchased for his contract, but which he had not used. The Government would reimburse him for all work done on his contract, for all materials used, for all money paid out in wages, and for all legitimate overhead expense, the Government in return taking over all materials in the various stages of their completion. Further, the Government would regard as proper costs whatever it cost the contractor to terminate and settle his subcontracts, and would pay these costs. Finally, in specific instances the Government would pay money in amortization of the cost of machinery and tools bought especially for war use, the sum to be proportioned to the amount of work completed. And whatever else the contractor was out of pocket legitimately, the Government would pay. When the various costs were brought together as a lump, to this sum the Government would add 10 per cent as profit. It would, moreover, allow 6 per cent interest on money which the contractor had invested in materials, reckoning from the average time of purchase to the date of the settlement; but it would not allow 10 per cent profit on this investment in addition.