On the first anniversary of the armistice the Ordnance Department’s system of industrial demobilization had cleared up a large part of the war business. The district boards had passed upon 94 per cent of all contractors’ claims presented, and the Ordnance Claims Board in Washington had disposed of 73 per cent of the ordnance claims. The settlements at this time had cost the United States nearly $131,000,000, but that sum had settled uncompleted portions of contracts to the value of approximately $1,000,000,000; and, in finding the net cost of the liquidation to the United States, from the sum paid out in these settlements there was still to be subtracted the receipts from the sale of materials taken over in the settlements. By the end of 1919 the district boards had passed 97 per cent of all claims and the Ordnance Claims Board 81 per cent. By that time the total amount approved for payment in adjusting the claims was more than $166,000,000.
In the latter part of 1919, however, a different system of settlement went into effect. By that time about three-fourths of the ordnance claims had been settled, in a spirit essentially of bargain and compromise, the Government yielding points and the contractors yielding them in order to reach swift agreements. Those who did the bargaining for the Government were for the most part the original members of the district organizations, the men who had been in touch with the industry from the start. As the unfinished business diminished in quantity, however, the members of the district claims boards one by one left the government service and returned to their own affairs, until by the autumn of 1919 the boards were made up largely of new members, most of them uniformed army officers who bore no such intimate relationship to the contractors. Within the Government, too, there was a growing spirit of criticism of the bargaining method of settling the contracts, even though the bargains had been highly advantageous to the Government. It was felt that more conventional methods should be employed. The result was a marked slowing down in the rate of industrial demobilization in the Ordnance Department.
It seems fitting here to say a word for the men who manufactured our ordnance during the war. The popular picture of a war contractor is that of a man swollen with new wealth and spending his money in riotous extravagances. This indictment, at any rate, cannot hold against the ordnance maker. Instead of profiting, the average ordnance contractor was glad enough to get out of the enterprise with a whole financial skin. Many were not so fortunate. An impartial investigation made by the Ordnance Department over its entire war manufacturing field showed that not more than one contractor in three or four, when the business was closed up, had anything to show for his war experience except the self-satisfying sense of having served his country.
In the light of the fact that so few of them profited at all and so many incurred actual loss, it is remarkable that they were not more grasping in the demobilization settlements; but the eternal fact remains that they were inclined to ask for less, rather than more, than was coming to them under their legal rights. This attitude was consistent with their whole attitude during the war. In the history of American industry there is no chapter more creditable to it than that of the attitude and accomplishments of the producers of ordnance during the World War. These men entered the undertaking with a zeal unsurpassed in any other part of the war organization. Working under an urgency such as American industry had never before experienced, they accepted the handicaps that had been placed upon the nation by its own peace-loving traditions and worked together as a unit to overcome the handicaps. They transformed their manufacturing plants with never a thought for the business they would one day have to resume. They undertook to produce, in quantities never before even projected, intricate materials of warfare the very names of which were unfamiliar to them. Despite the mounting costs of materials and labor, they managed to hammer down the prices of rifles, machine guns, explosives, shrapnel, and other important commodities, delivering to the Government not only a superior product, but a product costing the Government less than other nations at war paid for the same things. To accomplish this result they threw their normal rivalries on the scrap heap, opened up their trade secrets to each other, and virtually became partners in the single enterprise of supplying the American troops with the best munitions which American industry could produce.
As a rule, the profit-making war contractor was one who supplied commodities essentially like those produced in normal times. But supplies of this sort were almost unknown in the whole range of ordnance. The typical thing was to find on the day of the armistice the ordnance plant which had not yet come into full production under the original contract. This was because of the difficulties encountered in producing the more important items of ordnance. The months of the war had been marked by the heavy expenditure of money in the expansion of plants and the development of processes, and the armistice cut off the development before it had reached the profitable stage.
The producers did not attempt to recoup in the business liquidation that followed. These sentences are not intended to give a clean bill of health to the whole body of ordnance producers—some few of them sought to get more than they were morally entitled to get; some few, like the country horse trader, adopted the age-old procedure of barter by asking more than they expected to get. But where one man held out for the last penny of his rights, there could be found half a dozen others who put in no claims at all for money to which they were justly entitled. The great steel-producing industry, in particular, showed an aristocratic contempt of requiring its full due. Many steel producers pocketed their losses without a word: in fact, the Government settled a surprising number of ordnance contracts for the statutory one dollar apiece and thus saved itself millions for which it was legally liable. When the curious ordnance officers asked some of these contractors why they did not claim their full rights, they responded that the victory over Germany was compensation enough for them. As one of them expressed it, the achievements of the American boys in France had given him his run for his money.
In the Pittsburg district two steel producers had been engaged on contracts for essentially the same sort of material and on about the same scale. One was a small concern which had been kept at its wits’ end most of the time to finance its war enterprise. The other was one of the largest corporations in the United States, with ample financial resources. Into the Ordnance Claims Board came two claims terminating contracts of approximately identical characteristics. One of the claims was several times larger than the other, and naturally the Washington authorities questioned the larger claim. They found that the latter was a just claim in every particular. The discovery was made that the smaller of the two claims had asked for an amount in settlement much below what the producer was entitled to receive. The larger claim had been submitted by the producer whose finances could not stand any loss; the smaller by the great corporation referred to above. Both were allowed in full.
Of the 317 large ordnance contracts in the Pittsburg district, the Government settled 149, involving a total obligation of more than $23,000,000, for $1.00 each. In this and other districts thousands of subcontractors forgave the prime contractors their legal obligations without the transfer of a penny. In the Philadelphia district the prime contractors cleared up thousands of their subcontracts and said nothing about them in their liquidation claims. These instances of generosity were discovered only when the Ordnance Department checked up to find out why the final settlement costs were so much lower than the preliminary estimate of those costs, made in the first hurried days after the armistice.
The record of American ordnance production was not a flawless one—it was too large to be that—but in view of the general attitude of the producers, it is submitted that to have participated in that war industry was a distinguished honor.