he held himself deaf to all appeals against official injustice during the war. The time comes, he would often say, when one must shut his mind and act.

.....

Although he did not find it necessary to call together a coalition cabinet, embracing leaders of both major parties - holding that this would only hamper and embarrass his efforts - the President did summon the leading financiers, industrialists, administrators, and “best” minds to join in directing the hugely expanded action of the war government. These manned the Council of National Defense and its chief subdivisions, the War Industries Board, the National Food Commission and Fuel Commission, the shippling and railroad boeards, and the War Labor Board. Centralized control and integration of our industries and economic resources, under a President who had championed liberal doctrines, was carried out to an extent never before known here, though under conditions which in most cases richly favored their private owners. The railroads passed (temporarily) into government hands, in March, 1918. In other vital industries production schedules and consumption were controlled, prices were fixed, usually at a very high level, by agreements with the “Dollar-Year’ men who directed the government’s control boards.

The machinery of planning and control assumed a collectivist form, and after a period of preliminary confusion, worked with incredible energy under men like B. M. Baruch, Chairman of the War Industries Board, Herbert Hoover of the Food Commission, Secretary McAdoo, and Daniel Willard of the Railroad Administration, Edward Hurley, Charles M. Schwab, and James Farrell of the Shipping Board, and Dwight Morrow and Thomas W. Lamont, who were detailed to held the Treasury in its huge wartime fiscal operations. Wilson supported his administration “experts” as he supported the army and navy officers he had placed in command. But neither in the military field nor on the economic front at home did his leadership assume any distinctive form, either by striking errors or triumphs of personal command. A collective war machine, patterned after those built up in England as well as in germany, functioned impersonally, sometimes with strange effects. The President would be called in to determine points of policy as they arose; but his main interest lay elsewhere, one might say, beyond the war operations themselves.

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John S. D. Eisenhower, Yanks; The Epic Story of the American Army in World War I (New York: The Free Press, 2001) pp.299-

The Council of National Defense wielded almost no power, however, and it was soon succeeded by other, subordinate boards, the most notable of which was the General Munitions Board, set up just before the United States declaration of war. The success of the General Munitions Board, was largely due to the efforts of its chairman, Frank A. Scott, president of a company manufacturing high-grade machine tools for both the Army and the Navy. .....

These preliminary preparations, though a great step forward, proved inadequate to prevent confusion among both the government and industry when war actually came. Much of the problem lay in the old bugaboo, the independent bureaus, which conducted purchasing independently despite progress made in bringing them under the authority of all the chief of staff. No fewer than five (later 9) separate authorities were all bidding against one another. In addition to the Navy, other customers for war-related products included the Shipping Board, the Rialroad Administration, and the Red Cross, among many others.

The solution to the probelm would have to come from a cooperative effort, and to administer the sharing, President Wilson looked to a forty-seven-year-old native of South Carolina, Bernard M. Baruch, much as he looked to George Creel to mobilize public opinion. Baruch and Wilson had been friends for some time. Both were progressives, ambitious men, and Southerners. To Wilson, Baruch combined two ideal qualities: he was a Democrat who was also a Wall Street financier. Since early summer of 1916, Baruch had already been participating in an advisory capacity and by the spring of 1917 he enlisted a group of former business contacts to administer raw material purchases for the military. Soon he was appointed as Commissioner for Raw Materials in the newly formed War Industries Board. The coordination of war purchasing may have evolved slowly, but it was handled with remarkable success. All boards and authorities operated with the power of the President behind them, which included the power of commandeering. They established a Priorities System, a Price-Fixing System, and a Conservation System. So effective was the effort that twelve years later, General Hugh Johnson [ future New Deal NRA leader, and attacker of Long and Coughlin -DE], the officer so closely associated with it , could rhapsodize in a memo to General Pershing:

“Whole strata of industry were integrated for the first time in our history. Competition was adjourned. Industries learned to operate in vast units. Patents and trade secrets were pooled. Hostility was erased and cooperation was institutied. ...... Cooperation with Government - so suspiciously regarded in the pre-war era - became commonplace.”

Hugh Johnson was an advocate, but he was also an expert. He took great pride in declaring that the American war effort more nearly reached president Wilson’s ideal of an “entire nation armed” than did that of any other belligerent nation, Germany included. In the accomplishments he described, however, there was one serious caveat. The full power of America’s industrial mobilization was not geared to take effect until the year 1919.

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Robert Lewis Taylor, Winston Churchill; An Informal Study of Greatness (Gerden City: Doubleday & Company, Inc., 1952)

p. 54 A heartening aspect of his ministry [Minister of Munitions] was that upon the first inkling of American intervention in the war, Churchill displayed that practical view of his overseas cousins for which he has always been noted. Ina ringing speech, he cried, “Bring on the American millions! And meanwhile, maintain and active defensive on the Western Front, so as to economize French and British lives and to train, increase, and perfect our armies and our methods for a decisive effort later.” When the United States entered the war, Churchill was given the job of equipping the American millions he had spoken of, and he did it so well that afterwards General Pershing presented him with the Distinguished Service Medal. He was the only Englishman to wear the decoration. His assignemnt to prepare American soldiers for combat brought him into contact with Bernard Baruch, who was then chairman of the War Industries Board at Washington. They developed a close friendship that has continued without interruption to the present. In the last year of the war Churchill committed himself to an “anti-liberal” action that gave him his envied start toward becoming the premier target of the left-wingers, or plotters against society. ... His first such unpopularity was gained in the strikes of 1918, which were similar to the Communist-planned stoppages that swept Asmerica in the recent war. Like President Truman in the later crisis, Churchill threatened to end the strikers’ immunity from military service unless they returned to work. .... When the peace came, it returned Churchill much of his lost favor. ... In the Government he soon consolidated his gains with such speed that, as the Tories blinked, he found himself in the unprecedented position of holding two offices - Secretary for War and Secretary for Air. The protests that arose over this artistic coup shook the Cabinet. The old epithet of “medal snatcher” was changed to “portfolio collector.” A Captain Wedgwood Benn, a Liberal M.P., arose in Parliament and complained so testily that General Seely, the Under-Secretary for Air, was suddenly convinced of Churchill’s villainy and resigned. ...

...In the last days of the war he had enjoyed the distinction of crashing twice in the same day, a record still admired in aeronautics circles.

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August Hecksher, Woodrow Wilson; A Biography (New York: Charles Scribner’s Sons, 1991)

As the structure of inter-Allied cooperation was being successfully established [by House], Wilson moved to reorganize the war effort at home. ... A moribund Council of National Defense became the crisis oriented War Industries Board, first headed by Frank A. Scott and then, in a dramatic maneuver, put under the direction of Bernard M. Baruch. Overruling doubts, about the administrative capacities of the flamboyant and wealthy speculator, Wilson was rewarded by the serivces of a man intensely loyal and energetic, capable of swift decision and not afraid of responsibility. Baruch’s War Industries Board was in overall charge of purchases by the government and the Allies; its business was to see that manufacturers focused on goods essential to the war effort, and, indirectly, to see that goods destined for civilian use were made in ways least wasteful of labor and of scarce raw materials.

McAdoo, in charge of war financing, was most visible in his management of successive war bond drives.

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William Dudley, ed., World War I; Opposing Viewpoints (San Diego: Greenhaven Press, 1998)

p. 171 War Bonds Can Be Raised Throught Bonds, William Gibbs McAdoo (1863-1941)

An important question the United States faced after it entered World War I was how to raise the enormous sums of money necessay for its prosecution (the total direct cost of the war would eventually amount to $35.5 billion, a greater sum than the entire expenditures of the U.S. government in the first century of its existence). Americans were divided on how best to raise this money. The approach eventually favored by William Gibbs McAdoo, secretary of the treasury from 1913 to 1918, was to obtain the bulk of the funds through a series of goverment bond drives. McAdoo named the bonds “Liberty Loans” and orchestrated a massive public relations campaign that included posters, speeches by motion picture stars, and other features designed to raise general public support for the war effort as well as financial backing.

McAdoo announced the first of the Liberty Loans on May 14, 1917; a $2 billion offering of bonds with an interest rate of 3 ½ percent, exempt from federal taxes, and convertible to a higher rate if the government raised interest rates for future Liberty Loans. The following viewpoint is taken from a speech that McAdoo made one week later before bankers and business executives in Des Moines, Iowa. ... He maintains that such bond measures are the best way to finance both the war effort and the credits and loans America has extended to the Allies. [Reprinted from William Gibbs McAdoo, address entered into S. Doc. 40, 65th Cong., 1st sess., May 21, 1917.

Wars can not be fought without money. The very first step in this war, the most effective step that we could take, was to provide money for its conduct. The Congress quickly passed an act authorizing a credit of $5,000,000,000, and empowered the Secretary of the Treasury, with the approval of the President, to extend to the allied Governments making war with us against the enemies of our country, credits not exceeding $3,000,000,000. Since that law was passed on the 24th of April, less than a month ago - the financial machinery of your Government has been speeded up to top notch to give relief to the allies in Europe, in order that they might be able to make their units in the trenches, their machinery which is there on ground, tell to the utmost, and tell, if possible, so effectively that it might not be necessary to send American soldiers to the battle fields. As a result, we have already extended in credits to these Governments - Great Britain, France, Italy, Russia, and Belgium - something like $745,000,000, and we shall have to extend before this year is out, if the war lasts that long, not $3,000,000,000 of credits, but probably five billions or six billions. But it makes no difference how much credit we extend, we are extending it for a service which is essential ... you’re your own protection, if no other grave issues were involved in this struggle.

Extending Credit

This initial financing was not an easy thing to do. The Congress authorized the Secretary of the Treasury to issue, in addition to bonds, $3,000,000,000 of one-year debt certificates. Their purpose is to bridge over any chasms, so to speak, so that if the Treasury is short at any time, because of extraordinary demands, we can sell these temporary certificates, supply the need, and then sell bonds to take up these certificates. We have been selling temporary debt certificates in anticipation of the sale of these Liberty bonds. The first issue of bonds, - $2,000,000,000, - has not been determined by any arbitrary decision or judgement; it has been determined by the actual necessities of the situation. It is the least possible sum that we can afford to provide for the immediate conduct of the war. We are trying to spread the payment for the bonds over as large a period as possible, so that there shall be no interference with business. This money is not going to be taken out of the country. All of this financing is largely a matter of shifting credits; it is not going to involve any loss of gold; it is not going to involve any loss of values. These moneys are going to be put back into circulation, put back promptly into the channels of business and circulated and recirculated to take care of the abnormal prosperity of the country, a prosperity that will be greater in the present year than ever before in our history.

As we sell these bond, we take back from the foreign governments, under the terms of the act, their obligations, having practically the same maturity as ours, bearing the same rate of interest as ours, so that as their obligations mature the proceeds will be used to pay off the obligations issued by this Government to provide them with credit. So you can see, fellow citizens, that in extending credit to our allies, we are not giving anything to them. So far as that is concerned, for the purposes of this war, I would be willing to give them anything to gain success, but they don’t ask that. They are glad and greatful that the American government is willing to give them the benefit of its matchless credit, a credit greater and stronger than any naiton on the face of the globe. We give them credit at the same price our government has to pay you, the people, for the use of its money, because we do not want to make any profit on our allies. We do not want to profit by the blood that they must shed upon the battle field in the same cause in which we are engaged.

What can you do to make this loan a success? You have got to work, gentlemen, to make this loan a success. America never before was offered a $2,000,000,000 issue of bonds. This Government never has had to borrow so much money at one time. The money is in the country and can be had if you men will simply say that the Government can have it. The annual increase of our wealth is estimated to be fifty billions of dollars. You are asked not to give anything to your Government, but merely to invest 4 percent of the annual increase of wealth in this country, to take back from your Government the strongest security on the face of God’s earth, and to receive in return for it 3 ½ percent per annum, exempted from all taxation, with the further provision that if the Government issues any other bonds during the period of this war at a higher rate of interest than 3 ½ percent every man who has bought a 3 ½ percent bond may turn it in and get a new bond at the higher rate of interest. Could anything be fairer than that? Could anything be more secure than an obligation of your Government, an obligation backed not alone by the honor of the American people - which is of itself sufficient - but backed also by the resources of the richest nation in the world, a nation whose aggregate wealth to-day is two hundred and fifty billions of dollars; so that you take no risk, my friends, in buying these bonds. This bond offering is not going to be successful of its own momentum. Every man and woman in this country must realize that the first duty they can perform for their country is to take some of these bonds. Those who are not able to take some of these bonds ought to begin saving monthly to take some of them; and if they can not save monthly, or at all, they ought to make some man or woman who is able to take some of these bonds subscribe. If you do that, my friends, this first issue of $2,000,000,000 will be largely oversubscribed. It depends, however, upon you. Your Government can not do what you can do for your Government. A government is not worth a continental unless it has the support of the people of the country. And one thing that makes me glad - I ought not to be glad that there is a war - but I can not help feeling a certain amount of reverent elation that God has called us to this great duty, not alone to vindicate the ideals that inspire us but also because it has, for the time being, eliminated detestable partisanship from our national life and made us one solid people. As one people, my friends, with such an ideal, the Republic is invincible and irrestible, and there can be no doubt whatever of the outcome. I want you to give a thunderous reply on the 15th of June - Liberty bond subscription day - to the enemies of your country.

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Martin Gilbert, Churchill: A Life (New York: Henry Holt and Company, 1991) p.379

Haig’s new offensive opened on September 20. Thirteen days later, on October 3, he sent Churchill an urgent appeal for 6-inch howitzer ammunition. Any reduction of supply, he warned would hamper his present advance. Churchill instructed the British Mission in Washington to put the request to the the American War Industries Board. The Commissioner on the Board in charge of raw materials, Bernard Baruch, agreed to provide the shells required. Henceforth Baruch and Churchill were to be in direct telegraphic contact, sometimes daily. They had never met, but through their telegraphic exchanges emerged a close working partnership.

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Hansen W. Baldwin, World War I; An Outline History (New York: Harper & Row, 1962)

The dying Turkish empire had one brief respite and tow great defeats in 1917. On the Caucasus front, the Russian pressure ended with the Russian Revolution; from then until war’s end, a few feckless Russian soldiers in isolated detachments played inconsequential roles.

But in both Palestine and Mesopotamia the British reinforced success. David Lloyd George, like Winston Churchill, believed in eccentric strategy - attack on an enemy periphery - and in both Palestine and Mesopotamia political objectives superceded military ones.

The Palestine campaign stemmed from the militarily sound concept of defending the Suez Canal by an advance across Sinai to the strategic flanking position near El Arish. This was attained in late 1916 and in the first days of January, 1917. British air reconnaissance, which aided the ground armies greatly in the Palestine theater, placed the retreating Turks in early March in the Gaza-Beersheeba area. Sir Archibald Murray, the British commander in Egypt, was told to undertake a limited holding offensive to keep the Turks busy. He moved to the attack on March 26 in the First Battle of Gaza, with five reinforced divisions opposing about three Turkish divisions. It was a near victory, but bad communications and unwarranted assumptions led to failure, British withdrawal, and 4,000 casualties as against about 2,500 Turkish casualties.

Murray tried again on April 17, but this time against a strengthened Turkish position. Another Turkish division had joined, and Kress von Kressenstein, the wily German, had constructed mutually supporting strong points. The result of a bloody frontal assault was a severe British repulse, 6,400 British casualties, 2,000 Turks. Murray was recalled, and there came to Palestine a redoubtable general, nick-named “The Bull,” who had commanded the Third Army at Arras. General Edmund Allenby knew what he was doing, what he wanted to do, and how. He injected new life into the British forces.

Allenby asked and got reinforcements, and spent the summer in careful preparations. He was given two divisions from Salonika, formed another from bits and pieces in the theater, and by fall seven infantry and three cavalry divisions were ready. The Turks, too were reinforced, but not strongly. Turkish divisions freed by the Russian collapse had been formed into the so-called Yilderim (“Lightning”) Force under the German General von Falkenhayn, and some of these had reached the Gaza front. But the British had at least a two-to-one superiority.

Allenby attacked the Beersheba-Gaza position on October 31; Beersheba was captured by dusk after a mounted cavalry charge by an Austrailian brigade, and Gaza fellon the night of November 6-7. It was victory, but incomplete; the Turks held tenaciously to the key communications junctions which covered their retrat. Both retreat and the pursuit were governed by an arid land’s most precious commodity - water.

The way to Jerusalem was now open. From a defensive holding operation, the Palestine campaign had grown into a major offensive; Jerusalem had become a glittering political and psychological prize for the war-weary British people. Allenby had brought victory to a people starved for victory; on to Jerusalem!

Supply and communications favored the British. The Turks depended upon a 1,300-mile railroad lifeline, with wood-burning locomotives; the British had organized well their land routes across Sinai, and above all, they possesed the inestimable advantage of command of the sea. The result was inevitable.

On December 8, Allenby launched an assault with four divisions against Turkish positions which stretched from the Mediterranean, north of Jaffa, to angle back southward in the Judean Hills in front of Jerusalem. The Turkish lines bent and brok; on December 9 they retreated from Jerusalem; the Holy City was at last in British hands. In a few days the rains came, and the campaigning season was over.

The Palestinian campaign - fought by illiterate Turkish askars, Indian sepoys, rambunctious Austrailians, Oxford dons, and Prussian junkers, and supplied by manback, donkeys, camels, mules, horses, railroads, pipelines, and ships - was aided by an Arab revolt, incited, inspired, and organized by British pounds and promises, and by the tortured genius of a young British archaeologist, T.E. Lawrence. During 1917 Lawrence and his Arab bands - mostly camel moumnted - harried, cut off, and immobilized Turkish forces along the so-called Hejaz railroad in Arabia. During Allenby’s advance into Palestine, Lawrence and his irregulars covered the British right flank, made raids and reconnoitered, and supplied invaluable information about Turkish dispositions. Lawrence was one of that vanishing breed, an intellectual romantic, who was at the same time a man of rugged action, with a natural eye for terrain and an aptitude for soldiering. The Arab revolt and Lawrence, though important, were ancillary to Allenby’s success’ and Lawrence will live more for a book than a battle - his immortal Seven Pillars of Wisdom.

In Mesopotamia, the prize of Bagdad lured British armies ever northeward; Sir Stanley Maude with a quarter of a million men (less than half of them combat troops) far outnumbered the riddled Turks. The battle was as much one of supply as of bullets. River craft in large numbers, laborers, and animals of all kinds formed Maude’s lifeline to the sea.

Maude, after stubborn resistence and delay caused by torrential rains, finally cleared the enemy from Kut al Imara, the Shumran bend and Asiziyeh (March 4), which was developed as an air base for fourteen British planes. Halil had one 11,0000-man corps in front of Baghdad -attempted to make a stand at Diyala, but he was outmaneuvered and far outnumbered.

The city of the Arabian Nights fell after small-scale fighting on March 11, and a dream of “Drang nach Osten” - the Berlin-to Baghdad railway - was ended. ........

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John Pearson, The Private Lives of Winston Churchill (New York: Simon & Schuster, 1991)

p. 159-160 Ever since childhood, Churchill had been turning to aggression to dispel depression. Now he found in art the ideal way of sublimating his aggression. And he learned, too, to curb his anxieties, to cope with “Black Dog” as best he could, and to wait. Then, in the early summer of 1917, patience and painting were rewarded. The new Prime Minister, Lloyd George, summoned his old colleague from misery and exile. On July 12, 1917, Churchill was readmitted to the Cabinet, and his task suited his energies - if hot his original ambitions. The “man of war” as Baldwin called him, was made Minister of Munitions.

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James T. Rogers, Woodrow Wilson; Visionary for Peace (New York: Facts On File, Inc., 1997) Pp 55-56

"...in December 1917, Wilson took possession of the railroads in the government's name and appointed Treasury Secretary William G. McAdoo to run them. The appointment gave Wilson some angusih, since he disapproved of giving government appointments to relatives and McAdoo was now his son-in-law. But McAdoo already had a government appointment, made before he married Eleanor Wilson. ...

Fuel, which was mostly coal in those days, also presented a problem. It was quickly apparent that fuel supplies could not keep up with both civilian needs and the demands of the war industries. Wislon's advisors told him it would be necessary to cut down civilian fuel consumption by designating "heatless days" and by closing offices and factories from time to time. The president knew that such steps would be hightly unpopular, but he took them anyway. As Wilson predicted, there was a great outcry, but he stood firm. "It is extraordinary," he wrote to Bernard Baruch at the time, "how some people will wince and cry out when they are a little bit hurt."

Criticism came from a more troublesome source in January 1918. The Senate's Committee on Military Affairs, which had been monitoring the munitions program, decided the gap between production goals and actual output was too great. Senator George Chamberlain of Oregon, chairman of the committee, made a speech in New York declaring that "the Military Establishment of America has fallen down" and "has almost stopped functioning ... because of inefficiency in every bureau and in every department of the Government. Conservative Republicans set up a cry for the creation of a War Cabinet, consisting of members of both parties, to take over control of the war.

Wilson thought the criticism was unjustified, but he saw in it a chance to tighten his own control over the war effort. At his urging, Senator Lee Overman of North Carolina introduced a bill that would give the president stronger power to organize and direct government agencies in the conduct of the war. Although opponents in Congress denounced the bill as making the president a dictator, it passed. As the historian Frederick L. Paxson later wrote, "Few statutes have in so few words surrendered so much; and none has vested more discretion in the President.

Wilson used his discretion to vest more power in the War Industries Board, which he had created in the summer of 1917 to supervise war production and control the flow of raw materials. With his new power, Wilson made the board an independent body and named Bernard Baruch as its chairman. Baruch, a man with a strong hand and a wide aquaintance among businessmen, quickly brought order and efficiency to war production.

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Pg. 53 Wilson made a basic decision very early: He would not load the burdens of war onto the existing government departments (other than State, War and Navy), but instead would create new agencies to cope with the problems raised by the war. Among the agencies were the Committee on Public Information, headed by George Creel, and the War Industries Board, headed by Bernard Baruch. Wilson also appointed men who might be described as "czars" to deal with particularly crucial areas. Herbert Hoover (a Republican who was elected President 10 years after the war) became food administrator, and Henry Garfield was fuel administrator. Creel, Baruch, Hoover and Garfield -- along with Secretary of War Newton D. Baker and Secretary of the Navy Josephus Daniels -- formed what came to be known as the "War Cabinet," which met once a week to discuss war policies.

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[Wilson's Daughter marries Wm. McAdoo]

During all this activity in Wilson's first two years as president, the Wilson family saw both joy and tragedy. Two of the Wilson daughters were married in the White House. Jessie married Francis B. Sayre, a member of the faculty wat Williams College on November 25, 1913. ... Eleanor married Secretary of the Treasury William G. McAdoo on May 7, 1914. ... The McAdoos [gave Wilson two grandchildren] -- Ellen Wilson McAdoo and Mary Faith McAdoo. The McAdoo marriage did not last. McAdoo, the New York lawyer and businessman who had played a key role in Wilson's nomination, was 26 years older than Eleanor and a widower with six children at the time of the marriage. The McAdoos divorced in 1934, when McAdoo was a Senator from California, and a year later he married a 26-year-old nurse. Eleanor did not marry again.

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[Death of the first Mrs. Wilson]

But during the happy times of marrying daughters in the White House, it became increasingly apparent that Ellen Wilson was not well. She moved more and more slowly and became steadily weaker and paler. On March 1, 1914, she fell in her room at the White House. Her recovery from the effects of the heavy fall was very slow. She ate poorly and spent most of her time lying on a sofa or sitting outdoors in a wheelchair watching the gardeners work among her beloved flowers.

It was evidenct to Grayson and her other doctors that she had a serious kidney disease. Wilson however, persisted in believing that she would get better. As late as June, he wrote to Mary Hulbert:

The dear lady is at last beginning to come uphill, and my reassurance lightens my heart immeasurably. For some time I was almost without hope: I thought, with leaden heart, that she was going to be an invalid, another victim of the too great burden that must be carried by the lady of the White House; but that fear, thank God, is past and she is coming along slowly but surely.

It was onlyh a momentary improvement, however, and the "dear lady" grew steadily weaker. Wilson spent much of his time by her bed, holding her hand. That is what he was doing when she died, late in the afternoon of August 6 [1914]. He looked up at Grayson and said, "Is it all over?" Grayson nodded.

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Robert H. Ferrell, Woodrow Wilson and World War I (New York: Harper & Row, 1985) p 104-

The inability of the administration and the Army to organize production became apparent in the winter of 1917-18 with a railroad tie-up of massive proportions. ... The railroad supervisory organ, the Railroads' War Board, on July 20, 1917, by Bulletin 22, provided tags for expediting this freight, and its agents tagged everything and sent it to the east coast, causing colossal tie-ups, cars packed up to Buffalo and Pittsburg. The War Department requisitioned warehouse space on docks and even ships. Nothing seemingly could resolve the mess. The Railroads' War Board depended on voluntary measures; each railroad refused to permit its own engines to operate on another railroad's tracks, and hoarded cars. In November roads undertook "revolutionary measures to move engines and cars. President Wilson seized the roads effective January 1, 1918.

All the while coal production went down, supplies 6 million tons short each month. The President had fixed bituminous coal prices at $2 a ton when $3 probably was necessary to operate marginal mines ...

With little coal, a harsh winter, and the railroad tie-up popular attention turned to Washington. At first the problem seemed to be Secretary of War Baker, whom Colonel House schemed to get out of the way, appointed as private secretary to the President. ...

Behind the effort to "get" Baker lay intense feeling about the President himself. Wilson, even the friendly House believed, had allowed industrial mobilization to slip from his hands. "It is one of the things I have feared the President would sometime do. He seems to have done it. I have never heard such a storm of protest." ... "The fact is, [Senator Henry Cabot] Lodge wrote, "that the President has no administrative capacity. He lives in the sunshine. He wants nobody to tell him the truth apparently and he has a perfect genius for selecting little men for important places." Baker handed in his resignation, and the President refused it. House wrote that the Secretary "seems to be getting deeper in the mire, and the President cannot see it. Baker's mind is so sympathetic with that of the President's that the President does not see that he is no more of an administrator than he is himself."

It was at this point that Wilson turned to Baruch, the forty-seven-year-old New York financier ("Hebrew Wall Street speculator," opined House), $50,000 contributor to the Democratic Party in 1916, a handsome man, prematurely white hair parted down the middle, round face, twinkling eyes. In the letter of appointment the President denominated him "the general eye of all supply departments in the field of industry."

In the short time that remained before the war came to its end -- Wilson appointed Baruch on March 4, 1918 -- the new W.I.B. administrator followed the same voluntary procedures of McAdoo and Hoover, seeking to obtain cooperation and good will. Actually, of course, he had no time to assemble a large bureaucracy with wich to compel industrialists to do their part. His staff numbered 750 and included the president of the American Vanadium Company, J. Leonard Replogle; vice president of International Harverster, Alexander Legge; vice president of John Deere and Company, George N. Peek; and Wall Street investment banker Clarence Dillon. The W.I.B. organized the nation into twenty-one production zones, assigning businessmen to resource advisory committees. By the end of the war manufacturing centers were sending lobbyists to Washington to keep in touch. It was efficient use of talent. An unanticipated result of such decentralization was that businessmen obtained intimate views of the government's problems.

The W.I.B. managed some achievements that at the time and later were much celebrated, and doubtless helped the war effort. A key word in its judgement was "essentiality" -- whether a product had immediate war use. It's conservation division set specifications for products that might waste commodities, standardizing baby carriages and coffins, reducing bicycle designs (saving 2,000 tons of steel), taking stays out of corsets (allegedly obtaining enough metal for two warships). It induced tailors to reduce the size of sample wool swatches, saving 450,000 yards; forced substitution of paper wrappers for 141.8 million pasteboard cartons and 500,000 wooden packing cases of hosiery and underwear, freeing 17,321 freight cars; asked threat manufacturers to put 200 yards on each wooden spool (they had reduced yardage to 150 to hold the price during inflation) and saved 600 freight cars.

Baruch technically did not have control of prices, which belonged to a Price Fixing Committee headed by Robert S. Brookings, but he assumed that power to allocate priorities included prices. Whether because of his work or that of Brookings, the commodity price index during the war's last three months did not change. The metals group index, to which Baruch gave special attention, fell from 330 (July 1913 through June 1914 equalled 100) in July 1917 to an average of 211 for 1918. In March 1918 the index for all commodities was 188, at the Armistice, 201.

The W.I.B. acted as purchasing agent for the Allies, and in London created "joint executives" for such items as nitrates, tin, wool, leather, platinum. The executives served as exclusive buyers, and then allocated these commodities.

But behind the facad of achievement, creation of organization, lay the basic unwillingness of the Army to give up procurement. Whatever went on at highter levels in the W.I.B., its major activity ground away on the level of the so-called commodity sections, committees that passed on priorities and production quotas for such basic items as wool, rubber, steel, hardware. In the commodity sections sat representatives of both the W.I.B. and the Army. Here the Army conducted a sort of guerrilla war with the civilians. In the spring of 1918 when the sections were not working well at all, General March relieved their principle military coordinator, General Pierce, and gave coordination to Hugh Johnson. March was contemptuous of the W.I.B. and expected little from his new coordinator, who himself went over to the W.I.B. with intense suspicion of civilians. But unlike March, Johnson's suspicion was not based so much on the supposed superiority of Army professionals as upon, as he later admitted, sheer ignorance. He quickly saw the problem, and also found himself drawn to Baruch and the latter's assistant, Peek, both of whom he came to admire because of their intellectual agility and decisiveness. He created parallel commodity committees within the War Department. And he did his best to bring Army representatives in the W.I.B. commodity section into cooperation with civilian opposites. For a while he thought things were working, and then discovered that there were not, partly because Army representatives had other duties in the War Department, also because in an appraretly sensible effort to assert the primacy of civilians in industrial mobilization Baruch had given paramount authority to the chairmen of the commodity sections, all of whom were civilians. Army representatives had done what came naturally, which was to cease almost all efforts to cooperate, on the theory that the civilian heads were paying no attention to Army needs anyway. It probably was true that the heads were acting arbitrarily. Johnson arranged for decisions to be put back into the sections as a whole, taking them away from the chairmen. Johnson's task again became one of working out cooperation, which he was beginning to accomplish late in the summer of 1918 when he asked for and obtained a brigade command.

In the short time that Baruch had to make changes in industrial mobilization he could not manage enough to dominate the Army. Control worked the other way -- the Army controlled the W.I.B. Under claim of military necessity the Army simply told the W.I.B. what to order. It is illuminating to read how on May 13, 1918, the chairman of the W.I.B. wrote sharply to Edward R. Stettinius, then the War Department's "surveyor general" of purchases. Baruch admonished Stettinius that he had heard the department had placed orders far in excess of reasonable requirements. Five days later, a long time considering that the letter had passed only from one Washington office to another, Stettinius responded that he did not know any specific cases of overproduction in excess of requirements laid down by the General Staff and General Pershing. The response, of course, was no response at all.

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Geoffrey C. Ward, A First-Class Temperament; The Emergence of Franklin Roosevelt (New York: Harper & Row, 1989) P. 367 n

According to Alice [Allice Roosevelt Longworth],she and Franklin shared still another secret in wartime Washington. Bernard Baruch, then head of the War Industries Board, was believed to be conducting an affair with May Ladenburg, the beautiful daughter of a senior partner in the German-American banking house of Ladenburg, Thalmann & Company whose loyalties were thought suspect. Because Alice was a friend of hers, she was asked to suggest the best places in Miss Ladenburg's studio to plant microphones. She was happy to oblige: "All I was being asked to do," she said later, "was to look over transoms and peep through keyholes. Could anything be more delightful than that?" A microphone was duly hidden beneath the mattress of a suspended bed in which she entertained her lover.

Franklin was called in to provide a guest staying in the Ladenburg home with a sheaf of false but official-looking documents about the disposition of the fleet, with instructions to leave them around the house in the hope that his hostess might be overheard discussing them with Baruch.

Alice and several Secret Servicemen then gathered in an adjoining stable to listen to the tryst. Nothing momentus was recorded, she remembered, although "We did hear her ask Bernie how many locomotives were being sent to Romania or something like that. In between the sounds of kissing so to speak. ... Of course we were doing the most disgraceful thing in the name of looking after the affairs of our country, but it was sheer rapture!"

It especially pleased Alice that when she and Franklin laughted about the incident in the White House years later, Eleanor said, "You know Alice, I have always disapproved of what you and Franklin were doing!" They had been most unfair to May Ladenburg. Source: Michael Teague, Mrs. L., pages 162-163

....

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1918

John Pearson, The Private Lives of Winston Churchill (New York: Simon & Schuster, 1991)

p. 160-162 On a peaceful afternoon in 1918 a group of Royal Flying Corps mechanics waited by a staff car on the perimeter of a former meadow, now officially a “flying station,” just outside the Surrey village of Godstone. Less than a hundred miles away across the english Channel the last throw of the German High Command was about to be bloodily repulsed by the Allied armies on the western front, but none of this disturbed the rural calm of a Saturday afternoon in southern England.

......Before the propeller had stopped, a bulky figure in a sheepskin coat had heaved himself out of the passenger cocpit and the car had started off to pick him up. The driver knew from experience that Churchill was invariably in a hurry.

Forty minutes earlier, Churchill had been driven in a very large Rolls-Royce to the aircraft from his headquarters at the Chateau Fouquienberg, just behind the Allied lines near Amiens. Her referred to the place as “Chateau Fuck and Bugger,” and the Rolls had been specially lent him for his spell in France by his great friend “Benny,” Duke of Westminster. “You might tell Winston in answer to his wire that I only have a shut Rolls at present, if that’s any use to him,” Westminster told Churchill’s secretary when he asked if he could lend him an open Rolls on his appointment as Minister of Munitions in Lloyd George’s government in July 1917.

It seemed a typically casual arrangement, but the use of this personal Rolls- Royce exemplified the optimistic and flamboyant mood with which Churchill undertook his duties as the war was ending. After the personal disaster of Gallipoli, the months spent recovering from deep depression, and active service at the front, he was back where he knew he belonged - in power. His morale and confidence seemed entirely restored now that he was once again in office. His task, as Lloyd George knew when he appointed him, was one that matched his ingenuity and boundless energy. Present at every major battle to ensure that the guns had their munitions, he was a warlord once again. He loved the role, bullying the generals and thriving on the breath of battle. Half seriously, Clementine had called him “a Mustard Gas fiend, a Tank jugggernaut and a Flying terror,” but at least he was no longer the gray-faced husband she remembered, with the doom of the Dardanelles across his brow.

......

.....The chance arose to buy a farmhouse of their own in the Sussex farming country near East Grinstead. It was called Lullenden and seemed as peaceful and romantic as its name. ......

........During the two years Churchill actually owned it, it was still very much Lullenden Farm, and Sarah simply called it “a small farm outside East Grinstead.” But small it was not. ...

.... There were seven bedrooms, a dining room to seat eighteen, and a galleried seventeenth-century drawing room. Lloyd George, Sir Ernest Cassel, the press rporietor Lord Ridell, and the American lawyer, diplomat, and businessman Bernard Baruch were among the weekend visitors.

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1919

Lt. Colonel Richard Stockton, 6th, Inevitable War (New York: The Perth Company, 1932)

P. 516-517 .... Speaking of the World War, Mr. Bernard Baruch, Chairman of the 1918 War Industry Board, said, “Had the war gone on another year our whole civil population would have gradually emerged (as wardrobes and inventories became exhausted) in cheap but servicable uniform. Types of shoes warn were to be reduced to two or three. The manufacture of pleasure automobiles was to cease. Flaps from pockets and unnecessary trim in clothing would have disappeared. Steel had already been taken out of women’s corsets. “The conservation program was, of course, much broader than this. It affected practically the whole field of commodities . . . We had gasless, meatless, sugarless, fuelless days, and in ways and methods too numerous to mention we were greatly increasing the supply for essential uses by cutting off supply for nonessentials.”

[Army and Navy Register, June 27, 1931]

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Eliot Asinof, 1919; America’s Loss of Innocence (New York: Donald L. Fine, Inc.,

1990)

p. 90-91 Wilson landed in Brest on the thirteenth of the month, exactly as he had arranged in December at his first arrival. (Numbers, it seemed, were one of his more bizarre passions, and thirteen was his favorite. Because of the thirteen original colonies and the stripes of the flag? Because of the thirteen letters in his name? Because others thought it to be unlucky? ) On this thirteenth, however, Wilson took a far greater trouncing than he was prepared for. In his absence, his dear friend, Colonel Edward House, had permitted the detachment of the league from the preliminary treaty as a concession to the other conferees. The preliminary treaty dealt exclusively with economic and military matters. The resolution of the more complicated, and controversial league covenant was to be withheld for the final treaty that would be drafted later.

Wilson was stunned. When he emerged from his cabin after a meeting with House, his wife Edith reported that “he had aged ten years. ... I look back on that moment as a crisis in his life .. From it date the long years of illness.” Said Wilson: “House has betrayed everything I have worked for....”

.......The significance of the scene lay in the fact that it could have happened, that the fate of nations lay in the neurotic complexities of such a relationship. What, one might ask, was House doing there in the first place? No one had elected him. He had never held political office. The Senate had not approved his appointment. What forces had arranged that such enormous power be placed in his hands? .....Bernard Baruch, one of Wilson’s highly respected economic advisers ... once heard House ejaculating at the glories of his position: “Isn’t it thrilling to deal with the forces that affect the destiny of the world.!”

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The United Nations Conspiracy

Colonel Edward Mandell House was President Woodrow Wilson’s closest and most influential adviser. A powerful behind the scenes manipulator, House had enormous influence in shaping Wilson’s domestic and foreign policies to support economic collectivism and political internationalism. As noted by one biographer: “For all his might, Wilson could not stand alone. In every fruitful enterprise he borowed the Colonel’s brain. I shall not impute feet of clay to the idol. I concede they are living flesh. But they are not his own. Woodrow Wilson stalks through history on the feet of Edward Mandell House.”

Colonel House wrote the first draft of the League of Nations covenant and, in September, 1917, convinced President Wilson to commission a group of “intellectuals” to devise terms for peace and draft a program for a world government. The group, later known as The Inquiry, consisted of some highly talented individuals, many of whose names later became household words as prominent journalists, top government officials and influential academicians. For instance:

“Sidney Menzes, House’s brother-in-law and president of the City College of New York, was named director. James T. Shotwell was in charge of historical geography and then of the library. There was [sic] Christian A. Herter, later to become Secretary of State, and Norman Thomas, a Marxian Socialist. And the secretary was a gentleman named Walter Lippmann ....

“And then there were a couple of brothers, enterprising chaps - Allen Welsh Dulles (later Director of the Central Intelligence Agency) and John Foster Dulles [later Secretary of State].”

President Wilson drew heavily upon the work of the Inquiry in formulating his famous Fourteen Points program which was presented to Congress on January 18, 1918, as a peace strategy to save the world. The group incorporated various peace proposals and the League of Nations covenant into the document, which the United States rejected first on November 19, 1919, and again on March 20, 1920.

American internationalists expected the frustration and dissruption generated by World War I to condition the American people so the United States could be enticed into the League of Nations as an alleged means of avoiding future wars.

However, by the spring of 1919 it had already become clear that the League would face serious , possibly fata, opposition in the United States Senate. Colonel House and a few of his followers therefore began laying groundwork for a long-range effort to condition Americans to accept eventual United States membership in the supranational organization steeped in their particular brand of collectivist internationalism. If World War I couldn’t do it then perhaps some later conflict could, for as Alexander Hamilton had recognized decades earlier:

:Safty from external danger is the most powerful director of national conduct. Even the ardent love of liberty will after a time, give way to its dictates. The violent destruction of life and property incident to war, the continual effort and alarm attendant on a state of continual danger, will compel the nations the most attached to liberty to resort for repose and security to institutions which have a tendency to destroy their civil and political rights. To be more safe, they at length become willing to run the risk of being less free.” On May 30, 1919, Colonel House and his associates met with some like-minded Englishmen at the Majestic Hotel in Paris. The British participants subsequently established the Royal Institute for International Affairs (RIIA), while the Americans returned to the United States and founded the American Institute for International Affairs (AIIA). The AIIA subsequently merged with the Council on Foreign Relations (CFR), a languishing discussion group which had been formed in New York, during the war. The merger was formally incorporated in New York City on July 29, 1921. According to Hamilton Fish Armstrong, who served for fifty years (until October, 1972) As managing editor of the CFR’s influential quarterly, Foreign Affairs, “Besides taking the Council’s name, they gained the financial backing of it s public-spirited membership. They also acquired a locus, something vital if they were to continue functioning collectively and not as individuals dispersed in academic and other centers. .....

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1920

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1921

Murray Rothbard, America’s Great Depression, 2nd ed. (Kansas City: Shed and Ward, Inc., 1972)

p. 198-200 The next year, 1921, saw determined and well-organized efforts toward a nationwide cotton cartel. The American Cotton Association, The Cotton News, and other groups urged an acreage reduction of up to 50 per cent for cotton, and South Carolina officially proclaimed a “Cotton Acreage Reduction Day.” Acreage was reduced considerably, and this, joined with a poor crop, lowered the supply greatly; but cotton prices rose less than proportionately to the fall in output, thus frustrating the cartellists once again.

....

A precedent had been set by the wartime Food Administration Grain Corportaion, which had fixed high prices of wheat in order to stimulate production and had itself distributed the wheat available. Furthermore, the Hoover European food relief program of 1919, widely trumpeted as a humanitarian gesture, was also a means of getting rid of “surplus” farm products and thus bolstering food prices. - But the drive for compulsory price support had not begun in earnest. It reached major imporance in the “equality for Agriculture” movment, launched in the fall of 1921 by george N. Peek and General Hugh S. Johnson and backed by the powerful support of Bernard M. Baruch. The idea was that since industry was protected by tarriffs, agriculture might as well join in mulcting the consumer. The governmetn was to maintain domestic farm prices at a high level, buying the unsold surplus and selling it abroad at lower, wold -market levels. Both Peek and Johnson had direct economic interests in farm subsidies as head of the Moline Plow Company, manufacturers of agricultural machinery.

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1925-1928

John Kenneth Galbraith, The Great Crash 1929, 3rd ed. (Boston: Houghton Mifflin Company, 1972)

p. 14 In 1925, under the aegis of the then Chancellor of the Exchequer, Mr. Winston Churchill, Britain returned to the gold standard at the old or pre-World War I relationship between gold, dollars, and the pound. There is no doubt that Churchill was more impressed by the grandeur of the traditional, or $4.86, pound than by the more subtle consequences of overvaluation, which he is widely assumed not to have understood. The consequences, nonetheless, were real and severe. Customers of Britain had now to use these costly pounds to buy goods that still reflected wartime inflation. Britain was, accordingly, an unattractive place for foreigners to buy. For the same reason it was an easy place in which to sell. In 1925 began the long series of exchange crises... There were also unpleasant domestic consequences; the bad market for coal and the effort to reduce costs and prices to meet world competition led to the general strike of 1926.

Then, and since, gold when it escaped from Britain or Europe came to the United States. This [flow of gold to the US] might be discouraged if prices of goods were [unattractively high] and interest rates [i.e., returns on investment] were low in this country. [Making the US a poor place in which to buy and invest, i.e., a poor place to purchase with gold or lend gold.] In the spring of 1927, three August pilgrims - Montagu norman, the Governor of the Bank of England, the durable Hjalmar Schact, then Governor of the Reichsbank, and Charles Rist, the Deputy Governor of the Bank of France - came to the United States to urge an easy money policy. The Federal Reserve obliged. The rediscount rate of the New York Federal Reserve Bank was cut from 4 to 3.5 per cent. ... The funds that the Federal Reserve made available were either invested in common stocks or (and more important) they became available to help finance the purchase of common stocks by others [i.e. margin account loans]. So provided with funds, people rushed to the market.

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Lionel Robbins, The Great Depression (New York: Macmillian, 1934)

p. 52-53 The situation seems to have been roughly as follows. By the spring of 1927 the upward movement of business in the United States, which started in 1925, showed signs of coming to a conclusion. A moderate depression [ i.e. a recession] was in site. There is no reason to suppose that this depression would have been of very great duratikon or of unusual severity. It was a normal cyclical movement.

Meantime, however, events in England had produced a position of unusual difficulty and uncertainty. In 1925 the British authorities [i.e., Churchill’s authority as Chancellor of the Exchequer] had restored the Gold Standard at a parity which, in the light of subsequent events, is now regarded to have been too high. The consequences were not long in appearing. Exports fell off. Imports increased. The Gold Standard was in peril. The effects of over-valued exchange made themselves felt with greatest severity in the coal trade. Throughout 1926 there raged labour disputes, which were the direct consequence of these torubles - first the general strike, then a strike in the coal-fields which dragged out for over six months, still further endangering the trade balance. By 1927 the position was one of great danger. International assistance was sought. And in the summer of that year, partly in order to help us, partly in order to ease the domestic position, the authorities of the Federal Reserve System took the momentous step of forcing a regime of cheap money. A vigorous policy of purchasing securities was initiated [ i.e., ‘open market purchases’ conducted exclusively at the New York Federal Reserve Bank that puts new supply of dollars into the loanable funds market in exchange for the governement securities purchased.]

On this point the evidence of Mr. A.C. Miller, the most experienced ,member of the Federal Reserve Board, before Senate Committee on Banking and Currency, seems decisive: “ In the year 1927 ... you will note the pronounced increase in theseholdings [Federal Reserve holdings of United States securities] in the second half of the year. Coupled with the heavy purchases of acceptances [i.e. with more injection of new loanable money as the Fed buys debt instruments] it was the greatest and boldest operation ever undertaken by the Federal Reserve System, and in my judgement resulted in one of the most costly errors committed by it or any other banking system in the last 75 years.

[Senate Hearings pursuant to S.R. 71, 1931, p. 134]

“What was the object of Federal Reserve Policy in 1927? It was to bring down money rates, the call rate among them, because of the international importance the call rate had come to acquire. The purpose was to start an outflow of gold - to reverse the previous inflow of gold into this country. [ibid. P.154]

The policy succeeded. The impending recession was averted. The London position was eased. The reflation succeeded. Production and the Stock Exchange took on a new lease of life. But from that date, according to all evidence, the situation had gotten out of control By 1928 the authorities were thoroughly frightened. But now the forces they had released were too strong for them. In vain they issued secret warnings. In vain they pushed up their own rates of discount. [Note: the discount rate is the rate at which the Fed lends to member banks, it is a much weaker instrument for the control of money supply, available loanable funds, and interest rates than is the more weighty and direct open market purchase or sale of securities by the New York Federal Reserve Bank -DE] Velocity of circulation, the frenzied anticipation of speculators and company promoters, had now taken control. With resignation the best men in the system looked forward to the inevitable smash.

Thus, in the last analysis, it was deliberate co-operation between Central bankers, deliberate “reflation” on the part of the Federal Reserve authorities, which produced the potential energy that was the worst phase of this stupendous fluctuation. Far from showing the indifference to prevalent trends of opinion, of which they have so often been accused, it seems that they had learnt the lesson only too well. It was not old-fashioned practice but now-fashioned theory which was responsible for the speculative excesses of the American disaster.

Murray Rothbard, America’s Great Depression, 2nd ed. (Kansas City: Shed and

Ward, Inc., 1972)

[President Herbert] Hoover had been one of the earliest proponents of a Federal Farm Board to aid cooperative marketing associations ... And so it was not surprise, that as Presidential candidate, Hoover advocated support for farm cooperatives and promised the farm block that he would soon institute a farm-price support program. As soon as he took office, he fulfilled both promises. In June 1929, the Agricultural Marketing Act was passed, establishing the Federal Farm Board.

...The Federal Farm Board was furnished with $500 million by the Treasury and was authroized to make all-purpose loans, up to a twenty-year period, to farm cooperatives at low interest rates. The Board could also establish stabilization corporations to control farm surpluses, and bolster farm prices. Essentially it was a Sapiro-type cartel, this time backed by the coercive arm of the federal government. Hoover appointed, as chairman of the FFB, Alexande Legge, president of International Harvester Col and long-time protege of Bernard M. Baruch. International Harvester was one of the leading manufacturers of farm machinery, and therefore Legge, like George Peek, had a direct economic interest in farm subsidization. Other members included .... It is clear that the Board was dominated by representatives of the very farm cooperatives that it was organized to favor and support. Thus, the Hoover Administration established a giant agricultural cartel, directed by government, and run by and for the benefit of the cartellists themselves.