Regulation of Priorities

Report Outline
Increasing Use of Priorities to Aid Defense
Priorities Regulation During World War
Priorities Control in Present Emergency

Increasing Use of Priorities to Aid Defense

Speed-up of the defense program, in accordance with the Roosevelt administration's policy of “all-out” aid to Britain, is expected to result in increasing use of priorities control, (1) as a means of eliminating bottlenecks in industrial plant and equipment, raw materials, transportation, or labor supply, and (2) as a means of resolving conflicts between military and civilian demands. During the World War, the priorities system developed from a method of obtaining preference for military orders into the central feature of the whole war economy, becoming the most important instrument used by the government in regulating the economic life of the nation. Bernard Baruch, chairman of the War Industries Board in 1918, has said: “The priority system proved effective beyond the hopes of its proponents. It affords a method of almost instantly marshalling the industries of the country and thereafter synchronizing their operation in a far more effective way than if the government were in actual control and operation of any of them.”

The initial step in priorities control during the present emergency was taken last August when the priorities committee of the Army and Navy Munitions Board assigned preference ratings to government contracts for critical defense materials. These ratings are intended to assure prompt delivery of defense orders. Contractors are required to defer production of private orders or of government orders bearing lower preference ratings where necessary to permit delivery of defense items on scheduled dates. Authority for this type of priorities control was granted in an act to expedite naval shipbuilding, approved June 28, 1940, which provided that Army and Navy orders “shall, in the discretion of the President, take priority over all deliveries for private account or for export.”

Machinery Established to Administer Priorities

Establishment of a civilian priorities board as an adjunct to the National Defense Advisory Commission, under an executive order of October 22, 1940, laid the basis for more pervasive control of defense production through the medium of priorities. The work of the board in extending the scope of the priorities system was cut short, however, by the reorganization of government defense agencies early this year. Under the executive order of January 7 establishing the Office of Production Management, the priorities board was reconstituted as an advisory body to the O. P. M., and administration of priorities powers was vested in a division of priorities within the O. P. M. E. R. Stettinius, Jr., was subsequently appointed director of the division, as well as chairman of the priorities board.