Financial History 25th Anniversary Special Edition (104, Fall 2012) | Page 45

BY MICHAEL A. MARTORELLI   BOOK REVIEW Freedom’s Forge: How American Business Produced Victory in WWII their desire to avoid such unpredictable but inevitable failures on the part of other institutions. McKinley is highly critical of the seatof-the-pants and undocumented analyses done in support of those bailouts. His extensive footnotes describe subsequent Congressional criticism of those analyses, and the suggestion by both regulators and legislators that some banks had earned the infamous sobriquet “too big to fail” (TBTF) by 1984. In discussing the events of 2008 and 2009, McKinley makes extensive use of the contemporaneous writings of journalists, the investigative reports of public and private organizations and the material in the first wave of crisis-related books written by participants and observers. He uncovers few new facts, and notes that even his Freedom of Information Act (FOIA) lawsuits were generally unsuccessful in bringing more transparency to the government’s deliberations. Yet, by recounting the attempts to cope with the problems of Bear Stearns, Lehman, AIG, et al. in close juxtaposition with the prior discussions of an earlier era’s concerns about the TBTF problem, McKinley adds considerable strength to his core argument about regulators’ inability to learn from history. His final chapter reinforces the book’s key message: the crises have been different, but the policy decisions made in their wake have been depressingly similar, and unable to prevent future problems. It’s a compelling argument.  Michael A. Martorelli, CFA is a Director at Fairmount Partners in West Conshohocken, Pennsylvania, and an adjunct professor of finance at Drexel University in Philadelphia. He recently earned an MA in History from American Military University. By Arthur Herman Random House, 2012 432 pages, $28.00 The vast body of literature describing how the Allied armies and navies vanquished the Axis powers in World War II includes few works focusing on the systems of production that manufactured the planes, tanks, ships, rifles and thousands of other pieces of armament and equipment necessary to support that task. Arthur Herman fills this void with Freedom’s Forge: How American Business Produced Victory in World War II, a masterful look at American industry’s performance before and during the years that war raged across the globe. He particularly highlights the accomplishments of William Knudsen and Henry Kaiser, two businessmen who refused to let isolationist Congressmen, meddlesome bureaucrats and intransigent union bosses prevent them from helping make America the “Arsenal of Democracy.” The American economy was neither vibrant not prostrate in May 1940 when President Franklin D. Roosevelt took his first tangible steps to prepare the country for war. As Assistant Secretary of the Navy in 1918, FDR had watched just one man (Bernard Baruch) transform that era’s War Production Board from an entangled bureaucracy to an efficient organizer of industry’s productive efforts. He ascertained from advisors that General Motors executive William Knudsen was the one man capable of performing a similar function in preparation for another world war. Herman explains how the President made Knudsen not a powerful production czar with clear authority,  |  Fall 2012  |  FINANCIAL HISTORY  43