#493 1942 · War Production Board (Ferdinand Eberstadt) · Wartime industrial mobilization / supply chain management
When every order had top priority, America stopped ranking orders and started tracking the actual steel
the problem
So many war orders had top priority that the ranking stopped meaning anything
background
When the United States entered WWII, the government needed a way to make sure scarce raw materials — steel, copper, aluminum — went to war production ahead of civilian use, and it started with a priority-rating system: orders were stamped with a letter and number combination signaling how urgently they needed to be filled, with suppliers expected to work through their backlog in order of rating. As military demand exploded through 1941 and 1942, though, every manufacturer had a strong incentive to claim the highest rating it could plausibly justify, since a low rating meant an order might never get filled at all.
The War Production Board responded to the inevitable crowding at the top by adding new, higher ratings above the existing ones — AA above A, then AAA as an emergency rating, then a further series of AA-1 through AA-4 superratings — but each new tier filled up just as fast as the one below it. By late summer 1942, so many orders carried top ratings that copper allocations, for instance, ran out before reaching manufacturers with a rating as high as A-1-d, meaning a rating that should have signaled real urgency had become functionally worthless.
what everyone would do
Add more priority levels above the ones already in use — the approach the War Production Board had actually already tried, repeatedly, adding AA, then AAA, then AA-1 through AA-4 as "superratings" each time the previous top tier became crowded, treating the problem as needing a higher ceiling rather than a different kind of system entirely.
what they saw
A priority rating told a supplier which order to fill first, but it said nothing about whether there was actually enough steel, copper or aluminum in the entire supply chain to fill all the orders that legitimately deserved a high rating — so manufacturers kept inflating their requests to whatever rating still got attention, and the War Production Board kept adding higher ratings to compensate, an arms race that could never resolve because it never touched the real constraint: the physical quantity of material actually available. The fix wasn't a better ranking, it was abandoning ranking for direct accounting — track how much steel, copper and aluminum existed, and allocate it in specific quantities to specific programs, the way a budget allocates dollars rather than ranking which department wants money most urgently.
the move
In September 1942, WPB chairman Donald Nelson made Wall Street investment banker Ferdinand Eberstadt vice chairman for program determination, and Eberstadt led the drive to replace the priority system entirely. Announced on November 2, 1942 and phased in through 1943, the Controlled Materials Plan required each claimant agency to submit its actual material requirements as detailed bills of materials, which the WPB then balanced against real, known supplies of steel, copper and aluminum, allocating fixed quantities directly rather than ranking whose order should be filled first.
why it works
Under the Controlled Materials Plan, each claimant agency submitted its actual material requirements — not a request for a priority label but a bill of materials specifying exactly how much steel, copper and aluminum its programs needed — and the War Production Board allotted fixed quantities against the real, known supply, with accounting rules ensuring no agency could overdraw its allotment. Because the allocation followed the material itself through prime contractors down to subcontractors and suppliers, rather than resting on a rating a manufacturer could inflate, the system balanced actual supply against actual demand instead of balancing supply against however urgently everyone claimed to need it.
the payoff
The Controlled Materials Plan replaced competing priority claims with direct, accountable allocation of the actual scarce materials, tracked from claimant agencies through prime contractors down to subcontractors and suppliers, with accounting rules ensuring no agency could draw more than its allotment. By the end of 1943, the plan was widely regarded as a workable system that had resolved most of the materials-allocation problems the priority system's collapse had created.
where it breaks
It only works if the government can actually see and track material flow through the full supply chain — a system that only allocates to prime contractors but loses visibility once material passes to subcontractors reopens the same inflation problem one level down, just among smaller firms instead of large ones. And it requires real administrative capacity to process detailed bills of materials from every claimant agency and reconcile them against actual supply, a heavier ongoing burden than simply stamping a priority rating on an order, which is exactly why the priority system had been the easier, faster fix everyone reached for first.
what came after
The Controlled Materials Plan is credited as a foundational case study in supply chain and operations management, an early large-scale example of allocating scarce resources by tracking actual physical quantity and demand through an entire production network rather than by a rank or priority label — a principle that underlies modern enterprise resource planning and supply chain allocation systems built decades later.
references
- [1][Controlled Materials Plan]U.S. Government Publishing Office (War Production Board records), 1942govinfo.gov
- [2]The Big 'L': American Logistics in World War II, Chapter 3U.S. Army Center of Military History (via HyperWar/ibiblio.org), 1997ibiblio.org