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 Americas 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
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 Americas
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 clearthe 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
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,
When German war factories lacked steel-hardening materials
for shells; when German firms shut up shop in South America;
when Pershings 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 wolframstopThe 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 Boards 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 McCormicks 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
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
organizations 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.
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 publications
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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