Maines on Twenty-nine thirty-seconds or fight

The Sinews of ESSAYS ON THE

, A ,a r ECONOMIC HISTORY

v v 4 OF WORLD WAR II

EDITED BY Geofrey T. Mills

Hugh Rockoff

Iowa State University Press I Ames

Geofrey T. Mills is the Assistant Dean, College of Business Administration, and Professor of Finance at the University of Northern Iowa.

Hugh Rockoff is Professor of Economics at Rutgers University.

© 1993 Iowa State University Press, Ames, Iowa 50010

All rights reserved @ Printed on acid-free paper in the United States of America

Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Iowa State University Press, provided that the base fee of $.10 per copy is paid directly to the Copyright Clearance Center, 27 Congress Street, Salem, MA 01970. For those organizations that have been granted a photocopy license by CCC, a separate system of payments has been arranged. The fee code for users of the Transactional Reporting Service is 0-8138-1312-3/93 $.10.

First edition, 1993

Contents

Acknowledgments, vii

Introduction, ix

GEOFREY T. MILLS and HUGH ROCKOFF

I Europe and the Middle East

1 The Austrian Economy in World War II, 3

FELIX BUTSCHEK

2 The Anatomy of a Wartime Inflation: Britain, 1939-1945, 21

FORREST H. CAPlE and GEOFFREY E. WOOD

3 The Hungarian Economy in World War II, 43

ISTVAN CSOPPUS

4 Palestine in World War II: Some Economic Aspects, 59 Library of Congress Cataloging-in-Publication Data NACHUM T. GROSS and JACOB METZER

The Sinews of war : essays on the economic history of World War II

edited by Geofrey T. Mills, Hugh Rockoff. -1st ed. p. em.

Includes bibliographical references and index. ISBN 0-8138-1312-3 1. World War, 1939-1945-Economic aspects

Congresses. I. Mills, Geofrey T. II. Rockoff, Hugh. HC58.S57 1993 92-26832 330.9'045-dc20

5 The Impact of World War II on the Soviet Economy: A Review Essay, 83

SUSAN J. LINZ

6 War Consumption and Financing in Finland in the Second World War, 102

ERKKI PIHKALA

v

vi

II The United States

7 The Bracero Program and Farm labor legislation in World War II, 129

LEE J. ALSTON and JOSEPH P. FERRIE

8 The Microeconomic Bases of Short-Run learning Curves: Destroyer Production in World War II, 150

HENRY A. GEMERY and JAN S. HOGENDORN

9 Private Profit, Public Risk: Institutional Antecedents of the Modern Military Procurement System in the Rearmament Program of 1940-1941, 166

ROBERT HIGGS

10 Twenty-nine Thirty-seconds or Fight: Goal Conflict and Reinforcement in U.S. Cotton Policy, 1933-1946, 199

RACHEL MAINES

11 The Material Status of the U.S. Civilian Consumer in World War II: The Question of Guns or Butter, 219

HAROLD VATTER

Bibliography, 243

Contributors, 253

Index, 255

Acknowledgments

T he editors of this volume were aided, both materially and spiritually, by the generous support and encouragement of many others. Dr.

John Downey, former Dean of the Graduate College at the University of Northern Iowa, and Dr. Richard Newell, Director of International Studies at the same institution, both cheerfully provided financial support for editing and to offset travel expenses. Dr. El Von Warner, former Acting Dean of Northern Iowa's School of Business, was also generous with his travel money, as well as kind enough to permit Geofrey Mills an extended leave from campus to pursue work on this book. Dr. Larry Neal, of the Economics Department at the University of Illinois and editor of Explorations in Economic History, gave freely of his time and expertise in helping to shape the nature of this project. Larry was also a source of inspiration in the first instance by suggesting that we gather these papers together into a single volume. That suggestion was also made by Jacob Metzer, and with two such authorities behind it, the idea was too strong to resist. Ms. Cherie Kingkade and Ms. Tamie Tekippe cheerfully typed the manuscript, and then retyped it twice more as changes were made. To all of these people we are most grateful.

The editors also owe a large debt to our families, especially to the college professors to whom we are married, Hope Corman and Karen Mills, for juggling their own schedules and responsibilities, and those of our children, to make work on this volume possible. Twocareer families are difficult to manage in the best of circumstances, but when prolonged travel and writing time are factored into the equation, they can become nearly impossible. We want to thank these two women in this public, although inadequate, way for their help, kindness, and good cheer while we brought this project to completion.

vii

198 PART II I THE UNITED STATES

ging?" 267; Stone, Business As Usual, 136-37; Truman Committee report as reproduced in The Military-Industrial Complex, ed. Carroll W. Pursell, Jr. (New York: Harper & Row 1972), 134. '

55. Stone, Business As Usual, 123; Truman Committee report in The Military-Industrial Complex, ed. Pursell, 136; Catton, War Lords, 120.

56. Benjamin M. Anderson, Economics and the Public Welfare: A Financial and Economic History of the United States (Indianapolis: Liberty Press, 1979), 555; Smith, Army and Economic Mobilization, 312. Also Beaumont, "Quantum Increase," 130.

57. Smith, Army and Economic Mobilization, 395-96. 5_8. Beaumont, "Quantum Increase," 132. Also Richard Polenberg, War and Society:

.:he Unrt~d States, 1941-1945 (Ne~. york: Lippincott, 1972), 237; Benjamin Franklin Cooling, Suggestions for Further Research, m War, Business, and American Society, ed. Cooling, 190.

59. Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government (New York: Oxford University Press, 1987), chap. 9.

10 Twenty-nine Thirty

seconds or Fight:

Goal Conflict and

Reinforcement in U.S.

Cotton Policy, 1933-1946

RACHEL MAINES

D uring the years between the beginning of the Depression in 1930 and postwar demobilization in 1945-47, the federal government initiated

some 2 dozen programs affecting cotton agriculture. Designed and implemented by a bewildering variety of agencies, commissions, and boards, these programs frequently worked at cross-purposes, and just as frequently contributed unintentionally to each other's success. Often their impact on cotton farming was unexpected as policy synergies either produced selfcanceling results or exaggerated outcomes in either a positive or a negative direction. Because no agency was responsible for unified coordination, individual program evaluations could not fully reflect the conflict or reinforcement of goals and objectives across all the agencies regulating cotton agriculture.

Even had some agency been charged with the oversight of such regulation, as the Office of Management and Budget is today, it is unlikely that the finite capabilities and resources of federal administrators could have assessed the probable outcomes of cotton policy. In mathematical terms, the lower bound of potential policy synergies was 224 or 16,777,216 possibilities, assuming the simplest direct relationships between programs. Indirect consequences and externalities from market conditions, weather, federal regulation of other commodities, state and local programs, and the implementations problem described by Mathew McCubbins and Thlbot Page as "slippage" would extend these possibilities virtually to infinity. 1

Clearly, the complexity of cotton policy during the period 1933-1947 would

199


have resisted even the most systematic and intelligent efforts at holistic evaluation.

Cotton agricultural policy is hardly unusual in this respect; it is only one of many possible historical and current examples of challenges to interagency policy design. Legislative bodies generally are not set up to consider issues of regulatory synergy. Lester Lave, writing in 1984 of regulatory contradiction, observed that "Congress pursues externalities one at a time. The resulting legislation embodies the same sequential approach, instructing regulatory agencies to set and enforce standards for a single problem. Rarely, if ever, are agencies instructed or even permitted to account for contradictions with other federal legislation and rulemaking."2

The bad news is that rational choice on a cost-benefit basis is out of the question in such circumstances, but there is good news as well. Of the nearly 17 million possible synergistic effects of Depression and wartime cotton policy, almost as many mutually reinforcing results as conflicts can be counted among the observed outcomes. No claim is made to systematic analysis of all these possible outcomes, including the historical counterfactuals; I attempt here only an overview of the results of policy synergies within narrow temporal and regulatory limits.

The Regulatory Background, 1914-1933

As the most important U.S. cash crop in the first half of this century, cotton had by 1933 received considerable regulatory attention at both

the state and federal levels. In 1914, U.S. farmers had picked the largest crop in history up to that time, 16 million bales, precipitating the first of a series of overproduction crises and regulatory responses. In 1913, the United States raised five-eighths of the world's cotton, with exports accounting for a quarter of all U.S. export trade. Two-thirds of every crop before 1914 had been sold abroad. As the European war closed cotton mills and markets and threatened overseas shipments even to neutral nations, the bumper crop of 1914 attracted nationwide political attention for the first time since the Civil War and raised the possibility of intervention in the agricultural market. 3

Prices and production fell by more than a quarter in 1915-16 and began to recover only when the United States entered the war. Upland middling cotton sold in 1918 for 400 percent of its 1914 price despite halfhearted efforts by the War Industries Board to hold prices down. Even in this banner year, however, 44 percent of Georgia's cotton farmers reported losing money on cotton, mainly because of labor shortages and the continued advance of the boll weevil, which had entered the United States from

10 I U.S. COTTON POLICY, 1933-1946 201

Mexico in the 1890s.4 By 1920, prices had plunged again, and even mules were mortgaged on many once-prosperous farms. The situation of the United States as postwar creditor nation, the rise of economic nationalism, competition from rayon, and military surplus disposal at fire-sale prices combined to shrink the world market for U.S. current-crop cotton in the twenties. 5 These economic disruptions in cotton convinced both the public and policymakers that, at least in wartime, the free market was not a suitable instrument of cotton policy. The textiles/apparel depression of 1926 strengthened this impression as it continued to reduce the market for a still-expanding supply of cotton.

Economists have long recognized that overproduction lowers prices, but to cotton farmers of the late twenties, production choices made individually and in the economic aggregate could not employ the same model of rationality. Obviously, prices would rise if farmers engaged in universal cooperative action to limit output, but no mechanism for such action then existed. To individual farmers, a fall in prices meant that production and sales had to be increased to maintain the farm and family. The net effect of such decisions, of course, was a pattern of steadily falling cotton prices.

6

The Department of Agriculture began to urge the economic model of rationality on cotton farmers in 1919, attempting to reduce cotton acreage, encourage crop diversification, and limit the labor supply by a program of jawboning. This proved unavailing, however, as cotton prices fell from the 1919 high of 38 cents a pound to 5.7 cents in 1931. A bale of cotton then bought half as many _manufactured goods as it had between 1909 and 1914. With 2 million families, nearly a third of the farm population, and more than 8 percent of the general population directly dependent on cotton, the problem could no longer be left to the free market and to moral suasion programs. 7

Economy of Surplus

Through the Depression, two sets of forces acted to complicate the regulatory environment: an erosion of markets for cotton at home

and abroad, and powerful upward pressure on the size of the crop despite the inroads first of the boll weevil, then of dust storms, followed by acreage restrictions. Cotton's problems were not resolved until 1942, and even then their solution was temporary, depending on the artificial demand created by the war and its immediate aftermath. By the mid-fifties, cotton farmers were back in Washington asking for help.

As noted earlier, the United States had provided before the First World War more than half of the world's cotton. Seventy-five percent of the


cotton consumed by British mills, for example, was American, most of it in medium-staple lengths from 7/s to 1 inch. Of this Royall Brandis observed in 1956 that "Of all the major crops brought under control in 1933, cotton was most dependent on its foreign markets."8 Cotton policy goals, therefore, had to include both the economic welfare of the U.S. farm population and maintenance of a price structure for cotton that would keep U.S. crops competitive in the world market.

During the 1930s, foreign production of cotton increased, and the manufacture of substitute fibers at home and abroad, particularly rayon, showed considerable growth as well. Policy analysts of the Depression era were inclined to blame U.S. acreage controls and price-support loans for this phenomenon. Whatever the cause, in Joseph Ackerman's words, "Between the 1932 and the 1938 seasons, foreign consumption of American cotton declined 46 per cent, while the consumption of foreign growths increased 69 per cent."9 Leo Blakley estimated in 1962 that foreign cotton production increased by an annual average of 6.8 percent from 1920 to 1940, and Norman Keiser in 1956 cited yearly increases in the foreign crop of some 800,000 bales between 1934 and 1941. The dollar value of U.S. exports dropped from $810 million during 1922-24 to $280 million during 1937-39. Exports of the 1939 crop were down by more than a third over the twenties, the smallest quantity in fifty years. 10

This trend was not new, but its apparent acceleration in the 1930s was a source of concern to economists, policymakers, and agribusiness interests. Louis Bean described the trend in 1939: "[I]n the five years after 1878 foreign production increased about 90 per cent; in the five years after 1885 about 50 per cent; and in the five years after 1920 about 60 per cent. The increase in the five years after 1932 of about 75 per cent is not materially out of line with these earlier recoveries."11 In other words, the Depression contributed only marginally to the decline with its reduction of consumer purchasing power, and it is unlikely that any policy response could have arrested or reversed the expansion of cotton farming in foreign nations. El Molla, for example, reports increases in Egypt from 482,000 bales in the 1923-24 crop year to more than a million and a half in 1933-34. 12 Cotton acreage increased steadily from 1921 through 1937 in China, Brazil, Uganda, and the Soviet Union. At the same time, these nations and India were developing cotton manufacturing industries and reducing their cottontextile imports from Great Britain and other producer nations that had purchased raw fiber from the United States. The Soviet Union, formerly a major customer, stopped buying U.S. cotton in 1935. Italy and Germany both erected tariff walls during the thirties, and the latter began systematic rayon substitution in 1932. Domestically produced raw materials in the German textile industry rose from 7.5 percent in 1932 to 34.1 percent in

10 I U.S. COTION POLICY, 1933-1946 203

1938. Japan, however, maintained the morale of U.S. cotton farmers until the dismantling of Japanese textile manufacturing began in 1938. 13

As mentioned above, the decline in demand did not effectively reduce the supply, as individual planters actually increased their acreage to make up for falling unit prices. To make matters worse, the Federal Farm Board had attempted in 1929 and 1930 to hold up the price of cotton by loaning farmers 16 cents a pound in 1929 and 10 cents the following year, with the crop as security. Because forfeiture of the crop effectively repaid the loan, farmers saw the Farm Board, as they were to see its successor agencies, as a guaranteed market for their crop. From 1932 through 1937, the board had to dispose of the accumulated 3.25 million bales, the bulk of it at ruinous prices. Some 850,000 bales were donated to the Red Cross. These quantities were to appear trivial by comparison with the carryovers of later years. 14 J. D. Black, writing of the effect of Farm Board policy in 1935, said:

When the government had to stop trying to hold up the price of cotton because its half billion dollar revolving fund was tied up, the 3,250,000 bales of cotton it had in effect acquired, depressed the price below what it otherwise would have been, so that probably the average price during the whole period from 1929 to March 1933 was lower than it would have been with no government intervention. 15

While the Farm Board sought to dispose of surplus 1929 and 1930 crop cotton, the boll weevil was engaged in its well-publicized efforts to reduce the size of current-year harvests. According to Kent Osband, the insect might have succeeded in raising cotton prices had farmers, with the aid of Department of Agriculture educational programs, not responded so successfully:

Cotton farmers learned to cut their losses to the weevil. They changed their cultivation methods, harvested sooner and applied poisons. After an initial shock, every state witnessed a decline in weevil losses and resurgence of cotton production. During the 1930s, cotton yield losses to the weevil for the United States as a whole exceeded 11 per cent in one year (1932) only. Ironically, 1932, when the yield loss was 20 per cent, was a year of apparent gross overproduction. 16

Cotton prices fell to 4.5 cents a pound by the end of the year. Equally ironic was the fact that the improved agricultural methods used with such effect to combat the boll weevil in the mid-thirties were developed and taught by the same federal agency that was responsible for acreage reduction and price supports for cotton.

Responses to the price debacle of 1932 were so slow in Washington that by the time the Agricultural Adjustment Act (AAA) was designed and


implemented, the 1933 crop was already planted, so acreage reduction had to be carried out by paying farmers to plow up their newly planted cotton fields. Loans on the rest of the crop were made at 10 cents a pound, on the same bases as the Farm Board program four years earlier. Some success was noted as total crop yield declined in 1933 to 12.76 million bales from 14.4 million, and prices rose by some 37 percent. It was not, however, clear whether this effect could be attributed to policy or to market forces! 7

In the crop year 1934-35, the Commodity Credit Corporation (CCC) again made loans to cotton farmers in an effort to raise farm prices, assisted by another policy instrument, the Bankhead Act of 1934, which imposed a tax on ginning. The proceeds were intended to pay both for the CCC loans and AAA payments to farmers for land held out of production. Under the act, about 10 million bales were allocated to growers on a historical basis. Considerable effort went into the design of a parity price formula that would restore to the agricultural population the purchasing power it had lost since World War I. As Robertson described it in 1956:

As a price goal for agricultural commodities, parity was held up as the ideal by the 1933 Agricultural Adjustment Act. This meant prices which would restore the purchasing power of agricultural commodities to the level they had held on the average in a previous period, which, according to the original formula, has been the five years up to July, 1914. The parity price for any subsequent period was arrived at by multiplying the average price received by farmers in this base period by an index of the prices paid by farmers for various things (including interest and taxes) in the period to which the parity price was to apply. A support price was then fixed as a percentage of parity, and at this price the Commodity Credit Corporation took over temporarily or permanently whatever amounts farmers wished to withdraw from the market. If the support price were 1000Jo of parity, the farmer's terms of exchange would be the same as in the base period.'"

The effect of this program was to increase government-held surpluses. The Egyptian El Molla, who observed U.S. cotton policy with the affectionate amusement of one who stands to profit from its errors, characterized the AAA as a repeat performance of 1929-30: "Undaunted by the Farm Board experience, the Government again offered to lend more than the market value on cotton."'9 Henry Richards, writing in 1936 from a position inside the U.S. cotton program, counted the AAA a failure, pointing to the 1.7 million bales of unsalable cotton in government warehouses on October 31, 1935. Most of this surplus was in the short-staple category, which was systematically overvalued in all government loan programs in the Depression years.20 The significance of this miscalculation was not to become apparent until 1941.

10 I U.S. COTTON POliCY, 1933-1946 205

Meanwhile, the government cast about for means of disposing of the cotton on hand without depressing the market further. In 1935, the Federal Surplus Relief Corporation was organized, which employed povertystricken blacks and whites in the making of mattresses, towels, and sheeting from the surplus cotton. A total of 60,000 people was employed in this program before Emergency Work Relief ended. A plan was discussed to use the remainder of the surplus in road resurfacing, but the war intervened. 21

In 1936, AAA programs terminated by the disbanding of the National Recovery Administration were taken up again in the Soil Conservation and Agricultural Development Act, which imposed some acreage restrictions and subsidized soil banking in that year. The following year, however, cotton acreage was unrestricted, resulting in a massive overproduction of more than 18 million bales. Brandis wrote of this in 1956:

The cotton crop of 1937 was the first unrestricted one since 1932 and was the largest ever recorded (18.3 million bales). Exports, however, did not increase significantly and the percentage of production exported, consequently, fell to the very low figure of thirty percent. The carryover from this crop was so large that in the following year (1938), when exports fell by over two million bales, these exports constituted only fourteen percent of the total supply of American cotton. 22

Of this crop, 4.5 million bales went into the government's growing surplus. In 1938-39, the volume of exports rose somewhat, but the value of the exported staple was reduced by more than a third. By 1939, returns to cotton farmers averaged only about 60 percent of those of the late 1920s.23

The CCC had by 1941 spent over a billion dollars for cotton, more than for any other commodity; and 86 percent of its cotton holdings on the eve of the war were in short-staple lengths. 24 Programs to reduce cotton acreage had been quite successful over the previous decade; acres under cotton were down from 38.6 to 23.8 million. Unfortunately, other Department of Agriculture programs had resulted in tremendous yield increases, which in the case of large plantations more than offset the reduction in cotton land. The average yield drop for all cotton farming thus amounted to only 17 percent.25

Because of the staple length of most of the surplus, even Lend-Lease and the war did not exhaust the carryover. Some of the 11 million bales still in government hands in 1945 had been warehoused since 1934.26 Moreover, no significant economic gains for cotton farmers had resulted from the largely self-canceling programs in implementation before the war. As Ackerman expressed it in 1946, "During 1910-1914, two pounds of cotton would buy the production of one hour of industrial labor, but in 1935-1939, six pounds were required." Ackerman also charged that Depression-


era cotton programs had encouraged inefficient farmers to remain on the land; but in fact by the second half of the thirties farm populations had begun to decrease. 27 Tenant farming was particularly affected, with 22 percent of the tenant labor force in southern farming leaving the land before 1940. Pete Daniel in 1980 ranked the AAA with the boll weevil, floods, dust storms, and drought as a disaster to cotton farmers. 28 Warren Whatley says of these programs:

What caused these changes during the Depression? The final chapter shows that it was not price movements or technological change but the Agricultural Adjustment Acts of the 1930s that provided the economic incentives for a contraction in the amount of cotton planted and a mass displacement of tenants from the plantation. Although expressly implemented to increase farm incomes, the policies actually weakened labor's bargaining position by not granting labor an enforceable right to share in government subsidies. By paying landowners not to grow cotton, the policies reduced production of the most labor-intensive Southern crop. By distributing the payments between landlords and tenants in accord with the tenure status of the subsidized cotton acres, the policies provided strong economic incentives to displace tenants. In fact, the economic return to tenant displacement increased steadily over the Depression.29

One might go so far as to say that Depression-era cotton programs were successful in an unintended way: by driving many farmers off the land, the return to those remaining was increased. Obviously, even had such an outcome been foreseen, it would have been political suicide to publicize it, especially in view of the South's early support of the Roosevelt agricultural program.30

Before the displacement process was complete and before war began to draw farm labor into industry and military service, I. W. Duggan pointed out that there were too few acres per person in the cotton South, and that per capita gross income had been falling steadily since 1924.31 Keiser observed in 1956 that the cotton programs of the thirties "discouraged shifts to other crops or products" and perpetuated the South's underdeveloped and inefficient rural economic conditions. On the plus side, soil banking received positive evaluations in most retrospective assessments of the cotton program. 32

Other adjustments were attempted as well. Between June 18, 1930 and July 1942, long-staple (1 1/s inch or longer) cotton imports had been assessed a duty of 7 cents a pound. In September 1939, country quotas for this commodity set a total import limit of 95,000 bales. A little more than a year later, when Lend-Lease was already in operation, the quota was dropped for extra-long-staple 111/16 inch or longer, and in 1942 the duty was cut by


50 percent on all long-staple cotton, which was in short supply because of military demand. 33

In the meantime, Britain had cut its cotton imports even further as the nonessential textile industries released their labor forces for military production. The CCC in the United States, desperately taking up this slack, held in January 1940 a volume of cotton equal to about 86 percent of the annual yield, nearly all of it in the overvalued medium- and short-staple lengths for which there was no market. U.S. cotton mills were mobilized to 92.5 percent of capacity in 1939, but their demand was for the longer staple lengths used in military fabrics and civilian work clothing. 34 The CCC was forbidden by law to sell at less than 90 percent of parity until two years after the war, so other means of disposal of this stubborn surplus had to be devised. During the war John Moloney wrote of the cotton situation that "the outlook for cotton in the summer of 1939 was probably the blackest since the Civil War."35

An attempt at a solution to this dilemma in the defense years 1940 and 1941 was the Cotton Stamp Plan, the goals of which were simultaneously to reduce cotton acreage and increase demand by issuing farmers a paymentin-kind for acreage reductions. In 1941, $25 million in coupons redeemable for cotton goods grown and manufactured in the United States were distributed. Despite extensive publicity and "Cotton Stamp Week" store promotions, farmers expr.essed a virtually unanimous preference for cash payments.36 In 1961 Walton Harper observed of U.S. cotton policy that "There has been movement toward more public effort on behalf of agriculture since the beginning of World War I. The approach used has moved through the stages of advice, assistance, and action with no sharp break with the past occurring at any time, even in 1933."37 This observation holds as well with respect to the United States' entry into the war in December 1941. Policymakers struggled with both a surplus and shortage of the same commodity and tried with little success to resolve the inevitable goal conflicts until the cotton deferment of 1942-43 temporarily reconciled them by reinforcing the original goals of pre-Depression policy.

Wartime Cotton Policy

As we have seen, short- and medium-staple cotton formed much of the government-held surplus at the end of the Depression. With for

eign markets shrinking and U.S. mills processing war and Lend-Lease orders, fully 52 percent of the surplus was entirely without a market, and the remainder, nearly all in the short and medium lengths, was of limited utility for wartime purposes. The stocks could not be sold, as stated earlier, at any


price less than parity until after the war. Much of this stock thus remained warehoused until the crop year 1947-48.

Meanwhile, demand for staple 1 inch and longer rose steadily through 1944. In that year the army purchased some 11,000 items made from highquality cotton; furthermore, according to Moloney, "in pounds, in dollar value, and in diversity of military use, there is no basic raw material used by the Quartermaster Corps which ranks higher than cotton."38

Consumption in calendar year 1941 was about 10.5 million bales, an excellent situation for cotton farmers who earned more than a million dollars on current crop, the best since 1929. A civilian in this time period consumed about 25 pounds of cotton fiber a year, but soldiers used about ten times this quantity. Prices, already supported by a parity floor, went up rapidly as more than a quarter of the cotton textile industry shifted to defense production. The Office of Price Administration (OPA) studied the possibility of establishing price controls on the raw fiber but abandoned the project in despair when it was discovered that there were several hundred commercially significant classifications of cotton, determinable for each individual bale only by a trained and licensed cotton grader. There was little continuity from year to year in one region or even on a single farm in the grade of cotton sent to market, as the crop was sensitive to weather, soil conditions, and pests.39 Cotton yarn producers, purchasing in a largely unregulated fiber market, were thus concerned that the ceilings on their products would squeeze profits into an unacceptably narrow margin over the price of raw cotton. Labor costs rose 30 percent, but fiber prices nonetheless exerted more inflationary pressure on cotton textiles than did wages.40

In the following year, 1942, demand increased further, with the army and navy taking 35 percent of the crop, and subsidized exports to Canada providing expanded outlets for consumer goods. Despite price controls, cotton underclothing prices increased by nearly 60 percent in eighteen months, mainly through the process of uptrading.41 By mid-1942, the cotton manufacturers, with average profits up some 800 percent over 1936-39, had cast off their decade-long cloud of gloom. Cotton yarn producers, however, caught between OPA ceilings and Department of Agriculture floors, only doubled their average profits, with 23 percent attributable to larger margins and the remainder to increased sales. 42

The experience of wartime scarcity in the cotton economy was not new, even in the United States. During the Civil War, both U.S. and British mills competed for dwindling supplies of cotton, although in this conflict all staple lengths were in short supply; in the two world wars, serious shortfalls were experienced in the Allied nations only in the longer lengths used for military goods. 43 In World War I, cotton shortages in Germany


greatly reduced Central Power effectiveness because of the fiber's critical role in ordnance manufacture. As Henry Crampton explained to the National Association of Cotton Manufacturers in 1917: "[T]he amount of cotton used by the German government for rifle ammunition alone is 51 tons a day and in the lighter ordnance 153 tons a day .... In the navy a battleship firing at its greatest capacity uses 5,000 to 6,000 tons of powder, which means 10 to 12 bales of cotton a minute."44 The United States supplied fiber for Allied cordite, manufacturing 632 million pounds for its own use from April 1, 1917, to November 11, 1918. And Canada made 21,450,000 pounds for Britain and France by the end of the war, mainly from U.S. cotton. Cotton was substituted for imported wool in a number of civilian end-uses. 45

Similar substitutions took place in World War II, but more systematically in the more sophisticated regulatory environment of 1941-45. Jute, sisal, flax, and abaca, the last used in Manila rope, could no longer be imported in sufficient quantities, and cotton was pressed into service for some of these fibers' end-uses. Powder bags and cartridge cloth, for example, had always been silk because of this material's superior combustion properties.46 When-Chinese and Japanese silk were no longer available, the U.S. Ordnance Department undertook experiments in the use of a cotton and rayon blend in this application. In civilian uses, cotton appeared in items previously made from imported fibers; for example, linoleum manufacturers shifted in 1942 from burlap Uute) backings to cotton. Cotton bagging as a substitute for burlap was in demand by both military and civilian consumers.47

One of the most significant substitutions for cotton's future as a commodity was the shift away from its use in automobile tires, because in this application only long-staple could be used. This, as we have seen, was in short supply. Rayon was introduced as a substitute early in the war. Keiser commented on this in 1956:

Per capita consumption of rayon increased from 0.07 pounds in 1915 to 8.85 pounds in 1950. Consumption of rayon has increased more than 5 pounds per capita between 1940 and 1950 .... Before 1937 no rayon was used in tires for motor vehicles and consumption of cotton in tires was the largest use for cotton in 1937 and 1939, amounting to about 633,000 bales. By 1950 301 million pounds of rayon were used in tires, and the consumption of cotton in tires had declined to about 525,000 bales.48

The World Wiu II substitution of rayon for cotton thus spelled the beginning of the end for cotton in tire fabrics: in 1952 the automobile industry fell from the first-place position as a cotton consumer it had held since the


thirties, taking third place after sheeting and shirts. 49 Vehicle consumption in that year was 460,480 bales. The following year the trend was obvious: automobile use was in sixth place among cotton's markets, accounting for fewer than 312,000 bales. Nylon, invented just before the war and substituted for silk during it, did not become a significant competitor to cotton because as a true synthetic its properties and end-uses had more in common with protein fibers than with the cellulosics cotton and rayon.

In 1942, however, cotton's decline was still in the unforeseen future, and the chief problems were to produce enough long-staple for military production and to find enough labor to spin, weave, and finish defense orders. The scale of these latter may be judged from Alan Milward's fjgures on only two items of military apparel ordered for the army alone between 1941 and 1945: 514.1 million pairs of socks and 229.4 million trousers. 5° In addition, the military ordered undergarments, packs, tents, tarpaulins and truck covers, surgical dressings, camouflage fabrics, airplane cloth, tires, and a staggering array of similar items, nearly all of which required cotton of staple length close to an inch or longer. 51

By late 1942, about half of all cotton machinery was running war orders, despite industrial mobilization difficulties assessed by David Novick as among the most intractable of the war. 52 Far more cotton would have been consumed by the U.S. war effort from 1939 to 1945 had sufficient plant and labor been available for manufacturing it. In the case of surgical dressings, for example, one of the few critical commodities that used cotton in the shorter staple lengths, mills willing to produce gauze were in threeshift operation before Pearl Harbor. Because the unit price of surgical gauze was lower than that of other priority-rated textile products, few producers were motivated to convert to gauze to meet emergency demand. In desperation, the U.S. Army Medical Department built and operated a gauze mill of its own in 1944.53 The army resorted to an even more desperate measure in 1944-45, when cotton duck was being produced for winter tents, tarpaulins, and similar gear for the anticipated invasion of the Japanese home islands. About a thousand soldiers were released from combat duty on ninety-day furloughs at double pay to work in seventy-five southeastern duck mills. 54 With cotton textile industry absentee rates averaging 8.3 percent in January 1945 and an overall annual labor turnover rate in cotton goods that hovered around 100 percent, mills rarely met target production goals. 55

Even for this hobbled manufacturing effort, however, planners were concerned as early as 1940 about the available supply of medium-, long-, and extra-long-staple cotton. All acreage and marketing restrictions on cotton were removed in 1943. In the shorter lengths, the economy of surplus remained the reigning policy paradigm until well into the war. This was


scarcely surpnsmg given the annual carryovers of short-staple running more than 10 million bales, which drew labor and resources from more essential crops. Efforts to reduce this surplus continued, now reinforced by incentives to convert acreage to critical commodities, including cotton longer in the staple than 2 %z inch. 56

In the past, U.S. growers of the long-staple cultivars had had difficulty competing with Egyptian cotton. With up to 80 percent of this latter nation's population dependent on cotton, world market prices in the prewar period were nearly always below that of U.S. fiber. Although U.S. Upland medium-staple averaging an inch or more could be used in many applications, in some critical commodities, such as sewing thread, no substitute for long-staple was then available. 57

Although the medium-staple lengths responded to incentive measures early in the war with increases in production, the volume of American Egyptian cotton did not increase significantly until two mutually reinforcing federal programs were in place: a program of price supports for the long-staple fiber, and an agricultural deferment regulation by the Selective Service Administration that significantly reduced the number of war points assigned to cotton stapling less than 1 inch. Male farm workers of military age, or their employers, were under this rule required to raise cotton of 29/32

inch or longer or face the draft. 58

Before 1940, American Egyptian, the cultivar consistently yielding the target staple length, had been grown almost exclusively in Arizona, where the climate was too dry for the boll weevil. The extra-long Sea Island cotton, which had amounted to 88,500 bales a year in 1915, had been reduced by the depredations of this insect to 100 bales a year by 1945.59

Economic disincentives still existed in 1941 to raising American Egyptian; as Frank Lowenstein wrote in 1953, "the price of American Egyptian cotton had to be 1. 7 to 2.5 times that of American upland to give Arizona growers the same return from both types of cotton."60 In 1942, the Department of Agriculture implemented a price floor that supported a high ratio of return at the same time that the new agricultural deferment rules went into effect. Acreage more than doubled in a single crop year to 192,000 acres producing 73,800 bales. 61

Unfortunately, this gain was short-lived. While the draft spared a much larger percentage of the farm population than of industrial workers, even the combined force of military and agricultural policy could not keep young workers in low-return farming when defense production offered such attractive opportunities as were available between 1943 and 1945. In 1942 alone, nearly 3 million people left the land.62 The effects of this development, however undesirable in wartime, proved to be exactly what federal policy had been trying to achieve for more than a decade: a massive reduc-


tion in all cotton acreage, diversification of agriculture into other crops, and a substantial decrease in the overall farm population, particularly in the southern states. This outcome clearly reinforced Depression-era policies but worked at cross-purposes to wartime program goals. By 1943, Am~rican Egyptian volume had dropped to 59,600 bales, and by 1944 it had reached prewar levels close to 4,000 bales.63 Military specifications had to be adjusted to accommodate shorter staples that were, as al.w~ys, only too plentiful. Total cotton acreage declined from 24 to 20 mllhon acres between 1939 and 1944. The southern farm labor pool shrank by almost a third a change that was both to prove permanent and to play a role in the later ~echanization of cotton agriculture and in the industrialization of the

area. 64

To the frustration and dismay of planners in the Department of Agri-culture, however, the surplus of short-staple cotton remained entirely unaffected by war policy reinforcement of peacetime programs. The world ca.rryover of cotton at the end of the war was 25.8 million bales, the largest m history; the United States alone accounted for 11.4 million bales.

65 Tempo

rary solutions for what was becoming a chronic problem of short-staple surplus were found soon after the war in the release of long-frustrated civilian demand and in reconstruction efforts abroad. This latter proved to be one of the more outstanding examples of cotton policy goal conflict between military and economic national interests.

Postwar Surplus and Readjustment

Although war had not reduced the cotton carryover, it had brought important changes in the world agricultural and textile manufacturing

situation that significantly altered the decision environment. Rayon and nylon substitution, as stated above, were to have long-term effects on consumption of natural fibers.

The immediate problem of disposing of a year's supply of surplus cotton was resolved when the Marshall Plan in Europe and U .S.-financed reconstruction began in Japan. In 1945, the United States was the only major power with an intact textile industry; Britain's was reduced by 70 percent, Germany's was devastated by U.S. bombing, and Japan's had been dismantled during mobilization in the late 1930s.66 In the early postwar years, the textile firms of France, Belgium, Holland, and Germany, struggling to rebuild, received considerable aid in the form of cotton and wool stocks held by the U.S. CCC.

The reconstruction of Japan's textile industry, a project that succeeded beyond the wildest dreams of its planners, was undertaken in 1947


to restore the Japanese to economic self-sufficiency. This plan made immediate cost-benefit sense in light of the $400 million annually American taxpayers expended in the late forties simply to keep the Japanese from starving. 67 Textiles were regarded as a "safe," that is, nonmilitary commodity, that could be exported for hard currency. Cotton from CCC surplus stocks was loaned by the Allied reconstruction agency in the Pacific with the intention that Japan would sell its fabrics for dollars and repay the $48 million in fiber it had borrowed from its occupying power. Unfortunately, as the United States was at that time the only nation with an adequate supply of dollars, this meant that Japanese textiles had to compete with domestic products in the U.S. market. In this, they proved so successful that within twelve years American manufacturers began the concerted clamor for trade protection that has yet to subside. 68 In the late 1940s, however, this development was unforeseen; the problem was an agricultural surplus that was, by the end of the decade, in fact reduced nearly to zero by these reconstruction programs.

Meanwhile, acreage and marketing restrictions removed during the war years were not restored until1950, only to be canceled again during the Korean War. Trends in the foreign market continued as before, as did improvements in efficiency that kept up total production levels despite consistently decreasing acreage. A Department of Agriculture analyst observed in 1957:

During the 1953-55 seasons the United States production averaged more than 13 per cent above that of the 1920s, even though the acreage of cotton in cultivation was only half as large. The consumption of cotton per capita in the United States was about the same as it was in the 1920s even though the consumption of all fibers increased about 25 per cent. Exports during the 1953-55 period were only about 44 per cent of those during the 1920s, even though foreign consumption of cotton increased more than 60 per cent. 69

This additional manufacturing capacity, however, was now served by a foreign agricultural base in cotton 250 percent larger than that of the twenties. In addition, much of this latter was located in countries such as Turkey and Pakistan, whose economic goodwill it was essential to retain for national security reasons. Isolationist policy approaches used in the thirties were clearly not a viable option in the fifties.'0

Ironically, the same national security considerations that precluded unilateral price-cutting of the U.S. cotton surplus created a short-term demand for it during the Cold War. From the late 1940s through the 1950s an interagency group including Agriculture, Commerce, and the CCC, as well as defense agencies, worked toward fulfillment of congressionally man-


dated defense stockpiling goals. These included cotton, but of course only in the extra-long-staple lengths specified in military requirements and which were in short supply from domestic sources. Some cotton, however, went to foreign allies in exchange for such strategic commodities as chromite. When Pima S-1 was developed and, by the mid-fifties, was being produced in adequate quantities, even this was dropped from the Strategic and Critical list in 1957, leaving another government-held surplus for disposal, this time of 110 million pounds of extra-long-about 22,000 bales. Congress finally approved the sale of these stocks in 1962. 71

The lowest export year ever for American cotton was 1955, and once again the government faced an enormous carryover, also in record quantities. By August 1957, the federal cotton coffers were overflowing with 13.6 million bales of the fiber. 72 Acreage reductions had been successful, the farm population had been reduced, mechanization was under way, and the farm living standard raised. Unfortunately, pest control, soil banking, and similar programs to enhance agricultural efficiency had also been successful, resulting in an admirable increase of unsalable outputs from a constantly diminishing investment of inputs. Even within one agency, the Department of Agriculture, programs with the conflicting goals of improved efficiency and surplus reduction had worked at cross-purposes. Beginning to despair of ever devising a suitable solution to the problems of one of America's most historically significant crops, some analysts and policymakers, in the late sixties, toyed with the notion of a return to the free market. 73 This proposal has been consistently, if reluctantly, rejected on the ground that, as Mark Fowler expressed it, "Economics aside, prices and returns would probably drop to levels that would be politically unacceptable."'4 Cotton policy thus remains flexible; one might be tempted to say capricious, as regulators continue, of necessity, to rely on accidental reinforcements for short-term policy success and to make ad hoc adjustments to equally accidental conflicts.

Notes

l. Mathew D. McCubbins and Talbot Page, "A Theory of Congressional Delegation" (unpublished paper, Department of Government, University of Texas at Austin, 1984), 6.

2. Lester Lave, "Controlling Contradictions among Regulations," American Economic Review 74 (June 1984): 471.

3. This subject is treated in a number of works, including Robert Brandfon, Cotton Kingdom of the New South: A History of the Yazoo Mississippi Delta from Reconstruction to the Twentieth Century (Cambridge, Mass.: Harvard University Press, 1967); Bertha Dodge, Cotton: The Plant that Would be King (Austin: University of Texas Press, 1984); Robert Snyder, Cotton Crisis (Chapel Hill: University of North Carolina Press, 1984); Theodore Saloutos, The American Farmer and the New Deal (Ames: Iowa State University Press, 1982);


and Gavin 'Yright, The Political Economy of the Cotton South (New York: Norton, 1978) A cotton year Is coun~ed from August 1 through July 31. The English system of measurem~nt u.sed throughout this paper, was the standard for U.S. cotton during the period under d. : SIOn. · ISCUS

· . 4. _Saloutos, 66; !· H. Rogers, G. M. Fairchild, and F. A. Dickinson, History 0

P':1ces durmg the War: Pnc~s of Cotton and Cotton Products (Washington, D.C.: War Induttn~s B~ard, 1919); and Willard Range, A Century of Georgia Agriculture (Athen G . Umvers1ty of Georgia Press, 1954), 171-83. An overview of the cotton situation in t~~ F'a.~ Wor~d W~r is provided _in U.S. Bureau of the Census, Census of War Commodities, 19~;: Textiles F1bers, Wool, Silk, Jute and Kapok (Washington, D.C.: GPO, 1919).

5. James Street, The New Revolution in the Cotton Economy: Mechanization and 't Consequences (Chapel Hill: Universit~ of North Carolina Press, 1957), 39-46. On the dispo:~ of World War_ I surplus, see Committee on Expenditures in the War Department, Sale of Surplus Supplies by the War Department, rept. by the War Department 66th Cong 2d s 1~20 .. S. ~oc. 446, 4-5, 23-25; and Charles H. Lipsetts, U.S. War S~rplus: Its s~urce e;~d D1stnbut10n, 1917-1924 (New York: Atlas, 1924), 10-33.

6: V~n L. Perkins, "The AAA and the Politics of Agriculture: Agricultural Policy FormulatiOn m the Fall of 1933," Agricultural History 39 (October 1965): 221-24.

7. U.S. Co~gress, Senate, Cause of Decline in Cotton Prices, 1926-1929, rept. by the De~artment of Agnculture, 71st Cong., 2d sess. S. doc. 148. This unhelpful document explams that ~he dep~rtment is unable to be of assistance either to Congress or to farmers on account of Its own Impoverished condition.

8. Royall Brandis, "Cotton and the World Economy," Southern Economic Journal23 (July 1956): 30.

9. Joseph Ackerman eta!., "Adjustments in Southern Agriculture with Special Reference to Cotton," Journal of Farm Economics 28 (February 1946): 351.

10. Leo Blakley, "Quantity and Price Adjustments under Alternative Government Pro~rams for ~otto~,'' Journal of Farm Economics 44 (August 1962): 574; and Norman J. Keiser,

1 ~2~econs1derat10n of the Cotton Program," Review of Social Economy 14 (September 1956):

11. Louis Bean, "Changing Trends in Cotton Production and Consumption " Southern Economic Journal 5 (April 1939): 445. '

. 12. Y. El Molla, "American Cotton Policy through the Thirties,'' Egypte Contempo-rame 44 (July 1953): 12.

13. On Germany, see Otto Nathan, The Nazi Economic System (New York: Russell and ~ussell,_ 1971), 351; for Japan, see Jerome Cohen, Japan's Economy in War and Reconstruction (M_mneapolis:_ University of Minnesota Press, 1949). See also Rachel Maines, "Wartime AllocatiOn of Textile and Apparel Resources," Public Historian (January 1985).

1~. Charles D. Hyson, "The Shift Toward Medium-Staple Cotton,'' Journal of Farm Economics 26 (May 1944): 397.

15. J. D. Black, "The Outlook for American Cotton,'' Review of Economic Statistics 17 (March 1935): 76.

16. Kent Osband, "The Boll Weevil Versus 'King Cotton,' "Journal of Economic History 45 (September 1985): 628.

17. Black, 68; and Perkins, 221.

. 18. W. Robertson, "The American Cotton Dilemma and its International Repercus-SIOns," Economia Internazionale (Genoa) 9 (November 1956): 690.

19. El Molla, 4.

. ~0. Henry Irving Richards, Cotton and the AAA (Washington, D.C.: The Brookings InstitutiOn, 1936), 211-12.


21. Rainer Shickele, Agricultural Policy (New York: McGraw-Hill, 1954), 239; and Irvin M. May, Jr., "Cotton and Cattle: The FSRC and Emergency Work Relief," Agricultural

History 40 (July 1972): 403-11. 22. Brandis, 31; see also Thomas Jackson Woofter and A. E. Fisher, The Plantation

South Today (Washington, D.C.: GPO, 1940), 8-25. 23. BennettS. White, Jr., "The Shrinking Foreign Market for United States Cotton,"

Quarterly Journal of Economics 54 (February 1940): 255-76. 24. Theodore W. Schultz, Agriculture in an Unstable Economy (New York: McGraw-

Hill, 1945), 33. 25. Schultz, 171; and Walter W. Wilcox, The Farmer in the Second World War (Ames:

Iowa State College Press, 1947), 64-65. 26. James L. Forsythe, "World Cotton Technology since World War II," Agricultural

History 50 (January 1980): 208. . . 27. Ackerman eta!., 348-51. But see Warren C. Whatley, "Labor for the Pickmg: The

New Deal in the South," Journal of Economic History 43 (December 1983): 905-29. , . 28. Pete Daniel, "The Transformation of the Rural South, 1930 to the Present, Agri

cultural History 55 (July 1981): 247. On tenant farming, see John A. James "Discussion of Redish Gandar and Whatley," Journal of Economic History 44 (June 1984): 621.

2.9. Warren C. Whatley, "Institutional Change and Mechanization in the Cotton South," dissertation summary, Journal of Economic History 44 (June 1984): 616. .

30. Lee J. Alston and Joseph P. Ferrie, "Labor Costs, Paternalism, and Loyalty m Southern Agriculture: A Constraint on the Growth of the Welfare State," Journal of Eco

nomic History 45 (March 1985): 96. 31. I. w. Duggan, "Cotton, Land and People: A Statement of the Problem," Journal

of Farm Economics 22 (February 1940): 188-90. 32. Keiser, 115; and Street, 49. 33. Frank Lowenstein, The American-Egyptian Cotton Situation (Washington, D.C.:

GPO, 1953), 8. 34. "War Steps Up Textile Tempo," Business Week, 18 November 1939, 24; see also

"Textile Wages Rise" on p. 40 of the same issue. . . . 35. John F. Moloney, Cotton in Peace and War (Nashville, Tenn.: Vanderbilt Umversity

Press, 1944), 20; and "King Cotton Frets," Business Week, 4 December 1943, 109-10: Compare these accounts with that of John William Klein, Wool During Worl~ ~ar I~ (Wa_shmgto_n, D.C.: Agricultural Economics Bureau, 1948), 1-23. Wool, also a strategic fiber m this co~~Ict and a subsidized agricultural product in peacetime, made a much more successful transition from an economy of surplus to one of scarcity.

36. Street, 46-47. Government publications on the Cotton Stamp Program through mid-1940 are listed in Department of Agriculture, Agricultural Economics Bureau, Library, Food and Cotton Stamp Plans; Selected List of References (Washington, D.C.: U.S. Depart-

ment of Agriculture, November 1940). . .. 37. Walton William Harper, Agricultural Policy and Programs as V1ewed by IndiVIdual

Cotton Farmers in Georgia (Athens: Agricultural Experiment Station, University of Georgia

College of Agriculture, 1961), 7. 38. Moloney, 35. 39. "Cotton Problems," Business Week, 1 November 1941, 57. 40. Thomas Blanchard Worsley, Wartime Economic Stabilization and the Efficiency of

Government Procurement (Washington, D.C.: National Security Resources Board, 1949). 41. "What Next? Big New Shortage of Cotton Goods," Time, 17 May 1943, 76-78. 42. Office of Temporary Controls, Office of Price Administration, Financial Analysis

I

f


Branch, Wartime vs .. Peacetime Earnings: 2,230 Leading Industrial Corporations, War Profits Study no. 17 (Washmgton, D.C.: GPO, 1946), 7. . 43. Department of Agriculture, Agricultural Adjustment Administration, Cotton durl~g World War I and 1939 European War (Washington, D.C.: GPO, 1939); and Hubert D. Henderson, The Cotton Control Board (Oxford: Clarendon Press, 1922), 1-6.

. 44. Eugene Staley, Raw Materials in Peace and War (New York: Council on Foreign Relations, 1937), 24; and Henry E. Crampton, "The Council of National Defense and the Cotton Industry," Transactions of the National Association of Cotton Manufacturers 102 (1917): 260.

45. On cordite, see Leonard Porter Ayres, The War with Germany: A Statistical Summary (Washington, D.C.: GPO, 1919), 82; and David Carnegie, The History of Munitions Supply in Canada, 1914-1918 (New York: Longmans, Green and Co., 1925), 68, 159. Substitutions are discussed in "No Wool Famine," Literary Digest, 19 October 1918, 20-21; and Thomas J. ~aycock, Th~ Government and Wool, 1917-20 (Washington, D.C.: U.S. Department of Agnculture, Agncultural Economics Bureau, 1943).

46. The results of these experiments were unsatisfactory. Naval Academy, Department of Ordnance and Gunnery, Naval Ordnance and Gunnery (Washington, D.C.: GPO, 1957-58), 21; and Ordnance Corps, Ordnance Engineering Design Handbook (Washington, D.C.: GPO, 1957-62), 11-14. Fiber products were used extensively in industrial and military camouflage as well; see War Department, Military Intelligence Service, Camouflage, Information Bulletin no. 13 (Washington, D.C.: GPO, 1942). The complexity of substitutions across priority ratings is documented in War Production Board, Conservation Division, Conservation Ind~x and Substitution Guide (Washington, D.C.: War Production Board, 1943), especially sectiOns 3, 11, 13, and 286.

47. Henry G. Knight, Cotton's Place in the War (Washington, D.C.: U.S. Bureau of ~gricultural Chemistry and Engineering, 1942), 22-27. Cotton was substituted for jute in linoleum as well; see "To Make Cotton-Back Linoleum," New York Times, 7 May 1942, 34.

48. Keiser, 120; for military tire use see Constance Green, Harry C. Thomson, and Peter C. Roots, The Ordnance Department: Planning Munitions for War (Washington, D.C.: Office of the Chief of Military History, Department of the Army, 1955), 504.

49. These and subsequent quantitative data on cotton consumption are from the annual volumes of Cotton Counts its Customers (Memphis: Bureau of Business and Economic Research, 1937-56).

50. Alan S. Milward, War, Economy and Society, 1939-1945 (Berkeley: University of California Press, 1977), 68.

51. A useful list of cotton's military end-uses in 1942 appears in Claudius T. Murchison, "War Drafts the Cotton Mills," Journal of Home Economics 34 (April1942): 224-26; see also "Only the Best" [Cotton], Business Week, 15 August 1942, 97-98.

52. David Novick, Wartime Production Controls (New York: Columbia University Press, 1949), 76-104, 242-67.

53. U.S. Army, Medical Department, Medical Supply in World War II (Washington, D.C.: Office of the Surgeon General, Department of the Army, 1968), 24-25, 45-47, 63-66.

54. Byron Fairchild and Jonathan Grossman, The Army and Industrial Manpower (Washington, D.C.: Office of the Chief of Military History, Department of the Army, 1959), 184-85, 208-9.

55. "Cotton Mills Lag," Business Week, 20 January 1945, 41-42. 56. Royall Brandis, "Cotton Competition: U.S. and Egypt 1929-1948," Southern Eco

nomic Journal 19 (January 1953): 340. 57· Zaki Mahmoud Shabana, "Competitive Situation of Egyptian Cotton in the Amer-


ican Market,'' Journal of Farm Economics 33 (May 1951): 217. 58. Wilcox, 217; and Selective Service System, Agricultural Deferment, Special Mono-

graph no. 7 (Washington, D.C.: GPO, 1947), 58, 195, 329. 59. Lowenstein, 3. 60. Ibid.; and Range, 174. 61. Caffey Robertson, "Interesting Changes in U.S. Cotton Crops During 25 Years,"

Egyptian Cotton Gazette, January-February 1954, 22-23. 62. Albert A. Blum, "The Farmer, the Army and the Draft," Agricultural History 38

(January 1964): 34-35; see also Selective Service System, Agricultural Deferment, 87. 63. For an early assessment of policy goal conflicts in this context see H. C. M. Case,

"Problems of Achieving Maximum Food and Fiber Production in the Mississippi Valley," Journal of Farm Economics 26 (February 1944): 197-213, and discussion following by R. J.

Saville and C. A. Bonnen. 64. Gilbert Fite addresses this issue in detail in "Mechanization of Cotton Production

since World War II,'' Agricultural History 54 (January 1980): 190-207; and Cotton Fields No More: Southern Agriculture 1865-1980 (Lexington: University Press of Kentucky, 1984). See also Michael J. Brennan, "Changes in Cotton Acreage in the Southeast: Implications for Supply Functions,'' Journal of Farm Economics 40 (November 1958): 835-44.

65. Forsythe, 208-22. 66. John Kenneth Galbraith, Recovery in Europe (Washington, D.C.: National Plan-

ning Association, 1946), 5, 18. 67. Cohen, 419-92; Department of the Interior, National Resources and Foreign Aid

(Washington, D.C.: GPO, 1947), 90-92; and Department of Agriculture, Commodity Exchange Authority, Collapse in Cotton Prices, October 1946 (Washington, D.C.: GPO, 1947),

3-7. 68. I. M. Destler, The Textile Wrangle: Conflict in Japanese-American Relations,

1969-71 (Ithaca, N.Y.: Cornell University Press, 1979), 25-34. 69. U.S. Department of Agriculture, Report on Various Methods of Supporting the

Price of Cotton, prepared for the Committee on Appropriations of the United States Senate (Washington, D.C.: GPO, 1957), 1. See also U.S. Congress, Senate, Committee on Agriculture and Forestry, Cotton Marketing Quotas and Acreage Allotments: Hearings, 83rd Cong., 1st sess., 1953; Robert C. Jackson, "Current Textile Problems as Related to Textile Procurement," Quartermaster Review 30 (November-December 1950): 8-9; and U.S. Congress, Joint Committee on Defense Production, Defense Production Act, Progress Report No. 5: Cotton

Controls (Washington, D.C.: GPO, 1951). 70. Glenn H. Snyder, Stockpiling Strategic Materials (San Francisco: Chandler Pub-

lishing Co., 1966), 52-56; and Allan Eugene Pearson, "A Study and Evaluation of Stockpiling of Strategic Materials for National Defense" (thesis, Graduate School of Business Administra

tion, University of Pittsburgh, 1956), 5-62. 71. Executive Office of the President, Stockpile Reports to the Congress (Washington,

D.C.: Office of Defense Mobilization [and successor agencies], 1956-62). 72. U.S. Congress, House, Committee on Agriculture, Study of the Cotton Program

(Washington, D.C.: GPO, 1957), 12. 73. Caffey Robertson, "Some Observations on Recent Developments in USA Cotton,"

Egyptian Cotton Gazette, May-June 1956, 29-35. 74. Mark L. Fowler, "Government Programs and the Southern Cotton Economy,'' in

Contemporary Agricultural Marketing, ed. I. Dubov (Knoxville: University of Tennessee

Press, 1968), 75; see also Schultz, 33.

l

1. .

11 The Material Status of the

U.S. Civilian Consumer

in World War II:

The Question of

Guns or Butter

HAROLD VATTER

I treat here in a survey way and on a comparatively high level of aggregation, and without

. . . regard to distributive aspects, the empirical credtbthty. of the guns-or-butter trade-off with respect to the civilian consumer dun~g ~orld War n_. The major implication I draw from a preliminary exa~matto~ of that tssue is that the persistence of the widespread textbook tllus~~at10n of absolute material consumption reduction in order t? g~t ~ore mthtary goods and services on the production-possibilities frontier ts mappropriate as either a metaphor or a positive model for the United States.

Although one must acknowledge the abiding existence of choice in some sense, it is nev~rtheless fruitful to discover that in a rich economy sue~ as. that o~ the Umted States, a very large military establishment can be mamtamed wtthout the burden of a severe absolute reduction in overall custoi?ary, material consumption of private products. To show that thi~ ca~act~y was already demonstrated more than four decades ago is the chief obJecttve of the ensuing cursory survey.

World War II and the Production-Possibilities Frontier

Duri?~ ~orld War II, the United States, because of the Depression, was mttlally able to exploit a movement toward its private market

production-possibilities frontier. This fact may be represented by the

Distric I am indebte~ to Dr. Irving Richter, Emeritus Professor of Economics, University of the t of Columbia, and Professor John F. Walker of the Portland State University Depart-

ment of Economics, for critical comments.

219

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