These terms received widespread acceptance, although they allowed no prospective profits, and thereupon the various districts became scenes of great activity as the ordnance officers worked with the contractors to expedite the presentation of settlement claims by the latter. Inspectors and agents employed by the district boards checked manufacturers’ inventories, and boxed and set aside materials to be delivered to the Government, while district accountants audited the costs statements. Each field agent of a district board was made responsible for a few specific claims. He stood at the contractor’s elbow and helped him rough out his claim into proper form. A spirit of amiability prevailed. For many reasons the contractor wished to make his settlement as quickly as possible, and the district agent was there to tell him what items in his claim were indisputable, and what ones were likely to be contested, thereby holding up the final settlement. When the district agent and the contractor had agreed as to a claim, they submitted it informally to one of the members of the district claims board for his opinion. If he thought his board would be unlikely to allow certain items, the contractor could usually be persuaded to omit such items. Claims prepared under such conditions presented little difficulty to the various claims boards, and most of them went through to settlement without a hitch in the proceedings.
Most contractors were willing to forego their technical rights in order to save the Government from paying for useless production, but a few were obdurate. One man, working under a contract with a thirty-day termination clause, deliberately increased his rate of production five times in order to collect a maximum amount from the Government. When the Ordnance Department discovered his plan, it breached the contract outright and allowed the producer to take his grievance, if he continued to nurse one, into the courts. A rare instance of this sort, however, is cited only to show by contrast the prevalent attitude of industrial coöperation with the Government. Numerous producers omitted from their claims many items the validity of which could probably have been sustained in the future negotiations, but which were, however, subject to close scrutiny and therefore a factor of delay in the settlements.
The wheels of war industry had not ceased to turn before the Government began to make advance payments in settlement of the industrial claims. If the contractors were generous, so was the Government. The first settlement made illustrated the War Department’s attitude right through. A New York contractor had submitted a claim for about $15,000. On January 20, 1919, he informed the New York District Claims Board that two days later he had to meet a note for $10,000, a debt incurred in prosecution of his war contract. A member of the New York Claims Board took this claim in person to Washington and next day secured its approval by the Ordnance Claims Board, together with an authorization to advance $10,000 to the contractor pending the final approval and settlement by the War Department Claims Board. The New York district finance officer paid over the $10,000 in time to save the note from going to protest.
As the weeks went on the New York manufacturer’s plight was duplicated over and over again. The producers of ordnance supplies, after the termination of their contracts, faced enormous financial obligations which they would have to meet long before the machinery of liquidation could act upon their claims. To such producers the system of advance partial payments afforded great relief. The policy of advance payments not only saved numerous concerns from financial ruin, but it stimulated the general commercial reconstruction and resumption of normal business by releasing large sums of money and putting it again into circulation. And, it should not be forgotten, the system greatly aided the Government to secure favorable settlement terms from the contractors by offering the reward of early payments to those whose war business was quickly liquidated.
Since the prime contractors’ subcontract settlements were acknowledged costs which the Government was bound to pay in the prime settlements, it was vitally important that the Ordnance Department intervene to obtain for the prime contractors the most favorable terms possible in the settlement of their subcontracts. Every subcontractor, of course, had the legal right to insist upon the full performance of his contract, and he was not to be coerced by the bogey of the Court of Claims and its long-drawn-out procedure. He could go into the state courts and enforce his rights within reasonable time. Therefore, it is indicative of the spirit of war industry that the ordnance district claims boards found little difficulty in settling with the subcontractors on favorable terms. The prime contractors had no such interest in these terms as did the Government, since, whatever the subcontract settlement costs might be, the Government would have to pay them. The agents of the district boards readily persuaded the subcontractors, as a sporting proposition, to surrender their prospective profits voluntarily and accept the profit of 10 per cent on work actually done, even as the prime contractors, who had assumed the chief risk in the first place, had been willing to do. The efforts of the ordnance field agents in this direction saved the Government many millions.
The first complete claim received by the Ordnance Claims Board came from the Detroit district on January 10, 1919. The first claim to go through to final settlement by the Ordnance Claims Board was passed on February 20. The district claims boards sent the bulky and valuable settlement papers to Washington by courier rather than entrust them to the mails. When the system settled into its routine the Ordnance Claims Board passed upon the average claim within a week after its arrival in Washington. On the average the Government paid in the settlement of ordnance contractors’ claims an amount equal to about 12 per cent of the face value of the uncompleted portions of the contracts. The average ordnance contract entailed a government obligation somewhere between $100,000 and $250,000 in amount, but many were much larger. The Marlin-Rockwell Corporation of New Haven, Connecticut, one of the chief producers of machine guns and small arms, presented a claim for nearly $14,000,000. One of the largest war contracts was that with the American Car & Foundry Company, of a face value of over $100,000,000. In contrast, the New York Ordnance District Claims Board, which settled that contract, settled another (a subcontract) for $1.50. The claim of the DuPont Powder Company against the Ordnance Department was for about $3,280,000—this in settlement of contracts with a value of $50,000,000. The New York Air Brake Company presented to the Rochester Ordnance Claims Board claims aggregating $9,000,000. The New York District board settled 206 claims for $1.00 each, the contractors voluntarily refraining from presenting any claims above the statutory dollar which had to be paid to make the settlement legal.
Many were the interesting episodes which occurred during the ordnance liquidation. The St. Louis district was the chief source of black walnut timber secured during the war. Walnut was used in making gunstocks and airplane propellers. In hunting for walnut in this district we discovered that we were gleaning where Germany had reaped before us. The former solid stands of walnut in this district had been cleaned out in recent years, much of the timber having been shipped to Germany via the Gulf ports. Yet our gleaning was successful. Walnut trees, growing as individuals or in small groups, were still to be found along the country lanes, in farm lots, at the edges of orchards, and shading the grounds of the farmsteads. Nowhere were more than thirty trees in a group discovered. Consequently an adequate supply of walnut for the munitions plants depended upon a foot-by-foot search of the entire American countryside in the walnut regions. In this work the Government was assisted by tens of thousands of volunteers aroused to the need by the widespread publicity. The Boy Scouts turned their hikes into walnut-hunting expeditions. The country doctor, the circuit-riding clergyman, the bee hunter, and the muskrat trapper all made it their business to locate and report stands of walnut timber. As a result unexpectedly ample quantities of the wood were secured from regions supposedly denuded of it. On the day of the armistice the timber dealers found themselves stocked up with enough black walnut to meet all commercial demands for five years ahead.
One of the Ordnance Department’s timber cruisers located a grove of black walnut trees shading the farm home of a woman living in Missouri. She hated to sacrifice her trees, but listened to the appeal of patriotism and accepted an offer of $1,100 for them. Then, when the agent had left with her signed agreement in his pocket, she repented of her bargain and grieved so much at her forthcoming loss that the village minister suggested a remedy. He told her that the anticipated proceeds of the sale would pay for an automobile in which she could ride about the country and, amid the pleasant rural scenes, forget about the devastation soon to be staged in her own front yard. She acted on this suggestion, bought a car for $1,080, and in payment gave a note which she agreed to lift when the Government took the trees and paid her the money. The armistice intervened before the timber cutters appeared, and the Ordnance Department canceled the contract with the timber dealer. That left the woman with a half-used car, a note maturing in the bank to meet which she had no funds, and a clump of walnut trees for which the Government had no use. The St. Louis District Claims Board could not relieve her distress, but a member of the board brought the case to the attention of a meeting of war contractors; and it was arranged for the Missouri lady to keep both her automobile and her walnut trees.
The New York District Claims Board settled for $275,000 the claim of the Wah Chang Trading Corporation, of China, which supplied a large amount of antimony used in making shrapnel bullets. In the New York district also there had been a contract with the Japan Paper Company to supply paper parachutes for carrying floating signal lights. The contract was not a large one; yet in its settlement it was disclosed that there were about 10,000 subcontractors—individual Japanese families working in their own homes in Japan. Under the circumstances the board waived the usual rule that with every prime contract claim must be filed statements of settlement certified by every subcontractor.
Each of the district claims boards maintained in its quarters a progress chart which showed graphically each day the amount of industrial liquidation accomplished and the amount remaining to be done. In eleven of the districts this chart took the form of a thermometer, the rising mercury showing the amount of completed work. In the twelfth—at Cleveland—the chart was a representation of a bottle containing a celebrated beverage that does duty in these dry days for beer, and the task of the board was to empty this container.