The McCormick Family of Dauphin County

An Overview of the War Trade Board
By: Brian M. Moore, Penn State Harrisburg, Capital Campus, May 5, 1999

In times of war, countries make adjustments in their economic practices and governments create committees to implement and oversee these changes. During World War I, the economic activities of the entire world were altered, in order to better suit war needs. When America officially entered World War I it had to do the same. In order to mobilize American industry and economic resources, President Wilson created a number of powerful wartime boards. One board, the War Trade Board, headed by a prominent politician and businessman from Harrisburg, Pennsylvania named Vance McCormick, was created for such purposes. This organization, though obscure in contemporary scholarly work, became a powerful entity. By the end of the war, the War Trade Board controlled practically all the import and export activity of the world and played a major role in bringing the German war machine to a grinding halt.

In order for any board or committee to be successful it needed to be put into the hands of a capable leader. Vance McCormick proved to e a very capable chairman. When Wilson appointed him as head of the War Trade Board, he knew that McCormick was the best man for the job. Prior to America’s entry into the war, McCormick had been the head of the Exports Council and the Exports Administrative Board. He was also an experienced and savvy businessman, a quality that was helpful when dealing with other trade organizations and politicians throughout the world. For instance, after a meeting of the Supreme Economic Council, McCormick recorded the highlights of the meeting in his diary, in which he stated that he:

Had the pleasure of showing the council how France, who had been insisting upon maintaining the blockade against Germany, has been shipping carloads of cotton and wool materials into Germany through Alsace Lorraine. I had the goods on them from our representatives in the border and it created quite a stir in the council. (81)

The War Trade Board became so influential that McCormick met regularly with European royalty and top American, as well as Allied, government officials and military leaders.

What could have been the duty of a board with such great power over trade and a leader with such influence? The War Board, from its inception, was given an enormous array of different duties and responsibilities. The primary power it was given was the “power to regulate the exports and imports of the United States” (Culbertson 251). There were two laws created that supported the role of the War Trade Board and became the responsibility of the War Trade Board to oversee. The two laws were the Trading-With-The-Enemy Act and the Espionage Act. In order to understand the function of the War Trade Board it is important to understand how it worked in conjunction with the above mentioned laws.

Both pieces of legislation became major weapons in the arsenal of the War Trade Board. The Espionage act made it illegal to export from the U.S. any items specified by the President. Therefore, “In carrying out this law the War Trade Board issued or refused licenses for exportation of articles from the United States and thereby exercised an effective control over all outgoing products” (Culbertson 251). The Trading-With-The-Enemy Act “made it unlawful to import into the United States any articles mentioned in a presidential proclamation, except under such conditions as might be specified. Under this provision, a licensing system was established for imports. The War Trade Board had, therefore, complete control, through its system of licensing and its conservation lists, of the entire trade of the United States” (Culbertson 251). These measures allowed the U.S. and its Allies to deplete the German supply lines and profiteering.

In addition to licensing and exports, the War Trade Board had other direct and indirect duties. Some of those duties included providing ship tonnage, price fixing, acquiring and distributing supplies, uncovering German international businesses, aiding censorship organizations, and rationing food and relief to other countries. All of this was done in order to destroy the German war machine and support or replenish the Allied war machine.

When the U.S. entered the war, a number of government officials, including Woodrow Wilson, realized the need to create government organizations to control, adjust, and mobilize America’s resources and economy. With this in mind “the War Industries Board, the War Trade Board, and the Fuel Administration were created and set about deliberately to mobilize American industry for the winning of the war” (Appleton 63). On October 12, 1917 the War Trade Board was created and its job of crippling the German war machine and home front began.

Fortunately, the War Trade Board had sister organizations with which it collaborated in order to efficiently support the war effort. The War Trade Board worked in conjunction with organizations such as the Food Board, the Fuel Board, the Shipping Board, the War Industries Board, and the Railroad Board. Cooperation among the above mentioned boards was so imperative that Bernard Baruch, head of the War Industries Board, stated that “each is a necessary part of the perfected whole of war organization which is so necessary to make this country the very powerful unit which I have tried to picture” (Baruch 396). With all of these powerful organizations working together it is no wonder that the German leadership came to the peace tables shortly after America entered WWI.

When looking back at World War I many scholars ponder over what drove Germany to finally give up its fight for European dominance? One historian, Dean Hoffman, states that “...All military critics agree that while Germany could not have escaped ultimate defeat, she could have staved off a military disaster for a time, so why did this arrogant militaristic nation ingloriously surrender her fighting front when she did?” (Hoffman 3). The answer is clear–the German war machine was tapped out, their economy was more than crippled, and its citizens starved and impoverished. Hoffman emphasizes this point when he states that the German “people were hungry. Her trade was paralyzed. Her munition factories were producing ‘duds’. Her civilians were bubbling with revolution and no matter how staunchly her army stood, the case for her was hopeless” (Hoffman 3). The lingering question, which a majority of history books fail to address, is what part did the War Trade Board play in this scenario?

Through its direct duty of issuing import and export licenses and other indirect duties, the War Trade Board had a major effect on the outcome of World War I. One historian, Dean Hoffman, wrote that:

When German war factories lacked steel-hardening materials for shells; when German firms shut up shop in South America; when Pershing’s men obtained saddles and mules from Spain; when we and other Allies received lumber from Switzerland and iron ore from Scandinavia; when “movies” spreading German propaganda were banished from theaters of neutrals; when German trade with contiguous neutrals was virtually cut off; when hidden German-owned property was revealed in this country and its possessions; and when hundreds of thousands of ship tonnage were diverted to meet the requirements of the Yanks overseas, the trail of responsibility led directly to the War Trade Board. (5)

The War Trade Board accomplished all of the previously mentioned feats in a number of different ways.

The blows the War Trade Board dealt, as diverse as they were, all contributed to the downfall of Germany. One major economic and military oriented area the War Trade Board hit Germany hard in was German trade with neutral countries. Without resources supplied by neutral countries, the German war machine ran empty. It was the job of the War Trade Board to cut off neutral trade to Germany. In one particular situation, the Allies had a problem with Norwegian trade with Germany and desired an end to the activity. One American War Trade Board official worked out a deal with Norwegian officials allowing limited trade of non-military goods with Germany, but stipulated that:

Norway will not at all export the following articles to Germany or her allies, antimony, bismuth, manganese, mica, nickel, tin, titanium, and wolfram–stop–The presumption will naturally be that Norway pledges herself to provide for that no American goods imported in accordance with an eventual agreement with you should either directly or indirectly reach the enemies of the United States and also that the Norwegian Government in all cases of export of Norwegian goods to Sweden and Denmark will procure security that such goods shall not reach Germany or her allies in any way contrary to such an eventual agreement. It will likewise be the presupposition of such a possible agreement that the carriage to Norway of goods for which the United States give license must not be hindered by seizure from the side of the allies. (Link Vol. 45, 81)

If, for some reason, Norway refused the above mentioned trade parameters or defaulted on their agreement, the War Trade Board would refuse Norway essential supplies that the Norwegian people needed in order to subsist.

The War Trade Board would often refuse American goods and services to belligerent or Pro-German nations. One good example is Guatemala and the German owned Guatemala City Electric Powers and Light Company. In order to reduce German profits all over the world, the War Trade Board sought out and closed down German owned businesses. In the case of Guatemala, the War Trade Board refused “export licenses to American firms selling necessary electrical supplies to the still German owned Guatemala City Electric Power and Light Company” (Parrini 135). These supplies would not be shipped until the Alien Property Custodian in Guatemala was fully authorized to liquidate German possessions (Parrini). The result, as it was in most cases, is that the War Trade Board got its wish. Soon after the War Trade Board made its demands, a letter came back stating that “President Cabrera of Guatemala assured Leavell ‘that full authority to sell would be given to the Alien Property Custodian within a few days’” (Parrini). Why did Guatemala officials give in to the demands of the War Trade Board so quickly? The answer, simply put, is that without American electrical goods Guatemala City would have been in complete darkness. In this case, which was typical of most similar instances, the U.S. acquired the previously German owned business in Guatemala City. So not only did the War Trade Board cut off German profits, its also increased American international profits and business.

Another method employed by the War Trade Board was price fixing. The Board would regulate the price of materials to cut the commercial demand of essential war items or to allow the military to purchase goods at a reduced price. Some of the items that required price fixing were staples such as wool, rubber, metals, minerals, and certain types of food products. It was the job of the War Trade Board to allow the Allied powers to get essential items immediately and save money at the same time. For instance, because “prices were maintained, a saving of $50,000,000 on wool alone” was accomplished (Hoffman 14). After the war ended, a number of industries were pleading for the Board to end price fixing. The Board did end price fixing after the war, but did so slowly to ensure a smooth transition from a war time economy to non-wartime economy.

At the same time as the board was fixing prices, it was also diverting ship tonnage from commercial to military use. The diversion of ship tonnage to military needs was a primary concern of the War Trade Board, as well as the allied countries in general. In fact, the “scarcity of tonnage required a strict rationing of ships both of neutrals, the allies, and ourselves” (Hoffman 10). The Board would use one main U.S. commodity to control shipping, bunker fuel. It was set up so that “Every ship of neutral or allied ownership had to be licensed if it wanted bunkers. As a consequence, the Board could govern both voyage and cargo. If, in the Board’s opinion, the length of the voyage or the character of the cargo was detrimental to the winning of the war, it simply refused ship fuel, until the skipper or owner agreed to those things which help us win the war” (Hoffman 10). The issue of ship tonnage is one that even Vance McCormick found to be pertinent. It is evidenced, when reading one of McCormick’s diary entries in which he states: “Italy is begging for more wheat, and claims to be in serious condition on account of lack of tonnage. The same old story, everything reverts back to ships” (11). In hindsight, the effort put forth by Vance McCormick and the War Trade Board to control ship tonnage was imperative to success of Allied forces in World War I.

Another direction toward which the War Trade Board steered ships was to Allied or neutral countries in need of relief, rations, and supplies. At no time did relief, rations, or supplies get sent to any country without authorization from the War Trade Board. This was due to the fact that very little left American ports without the consent of the War Trade Board. The Board even fixed the amount of money an organization could send for relief. In one case, a Jewish organization in America wanted to send monetary aid to Jewish organizations in Europe, and the War Trade Board fixed the amount to be sent. One Jewish organization’s leader wrote a letter to Wilson in which he stated that:

From time to time the War Trade Board has granted licenses specifying the amount which may be forwarded from here for Polish relief for distribution through the agency indicated. These orders, as I am informed, have been made after consultation with the State Department. In December 1917, the War Trade Board fixed the amount that might be sent at $500,000 monthly. (Link Vol. 47, 555)

In once case, an organization received no relief by order of the War Trade Board. It was stated in a correspondence with Woodrow Wilson that:

due to the promulgation of an order by the War Trade Board to the effect that hereafter no relief funds may be sent into Lithuania or Courland, and that the reason for this order lies in the fact that information has bee received by the State Department that Germany is seeking to establish an independent government in Lithuania, that the inhabitants of Lithuania have declared themselves in favor of the German project, and are actually contributing funds to enable it to carry on war. (Link Vol. 47, 556)

In essence, if a country was in need of aid and the War Trade Board gained intelligence concerning Pro-German sentiments within the country, relief was denied.

The War Trade Board used a vast network of agents in order to manipulate the distribution of relief, rations, and supplies through the licensing system. By the end of the war the War Trade Board gathered an incredible amount of information on foreign companies. In fact, “the Board, just getting under way really, had information on 8% of the persons named in the license applications. Later the percentage grew to 80% (Hoffman 11). This information network was also used to seek out, expose, and destroy German propaganda distributors all over the world.

The Board even aided in the American system of censorship. When George Creel, head of the Censorship Board, wanted to censor printed material, he would do so. “Through contact with the War Trade Board, he could even stop the publication’s supply of newsprint” (Vaughn 224). Creel even used his contacts in the War Trade Board to “cooperate in preparing lists of magazine and book publishers whose publications were not to be passed by the authorities” (Vaughn 224). In this case the War Trade Board was the “authorities”, no license no export.

The control over trade that the War Trade Board wielded became so powerful that it was used as a bargaining chip at the peace conferences in Paris. When Vance McCormick and other members of the Board went to Paris in 1918, it was for an obvious reason. That was to help President Wilson create a peace agreement with economic sanctions as a bargaining chip and to conjure up a peace accord that would not infringe upon U.S. economic progress. It is even believed by some that “Wilson had anticipated playing strong economic trump cards at the peace table” (Kennedy 334). During the conference “the War Trade Board Chairman reported that President Wilson had expressly requested that the WTB should make no commitments nor enter into any agreements with any of the Allies with respect to commodities or other trade arrangements” (Kennedy 334). Wilson wanted the War Trade Board to economically pressure other members of the peace conference to fold to U.S. demands. When one War Trade Board member contacted Wilson from Paris it was:

to inquire “what economic pressure can the United States exert...to persuade the adoption by the Allies of our policies at the peace conference,” Wilson authorized an ambiguous reply. “In dealing with the new problems which are arising,” he instructed,” you should be governed by two major considerations: on the one hand, the prevention of any breakdown before peace of the spirit and practice of inter-allied co-operation; on the other hand the scrupulous avoidance of any commitments which would restrict our liberty of action at or after the peace conference...At the Peace Conference the economic power of the United States must be entirely unrestricted, as his force in our hands may be of powerful assistance in enabling us to secure the acceptance of our views.” (Kennedy 336)

It is obvious to see that the War Trade Board, through its licensing system, had a hand in bringing the war to a halt at the Paris peace table.

It is clear that the War Trade Board was effective in aiding the Allied defeat of Germany in World War I. The licensing system, which was simple in thought, but intricate in practice, allowed the War Trade Board to keep necessary supplies away from German war factories and troops. It is thanks to the great leadership of Vance McCormick and the efforts of his associates that the War Trade Board was able to have a positive impact on the outcome of the war. These collaborative efforts were also the reason that the board was able to meet its primary objective, which was to end German aggression by depleting or denying resources that enabled Germany to wage war. In meeting this objective the War Trade Board was able to help end one of the worst military conflicts ever known to man.

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