establishments of the country was, however, a work of great magnitude. It meant the classification of the industries of the country according to their essential characters for the prosecution of the war and the satisfaction of the imperative needs of the public, and the placing of individual concerns in many cases on what amounted to a rationing basis, where they could not receive the materials needed by them except as they secured a permit or license authorizing them to do so. This task of determining the extent to which a given industry or establishment should be deemed to be essential was one of extreme difficulty because of the many considerations of which account had to be taken. A product might not at first sight seem to be essential and yet upon examination be found to be so in order that some directly essential work might go forward. Goods not in themselves essential might be essential from the standpoint of our foreign trade. The country was a heavy importer of raw materials. These imports had to be paid for either in cash or with other goods. As it was of prime importance that we should conserve our gold supply as a basis for our expanding credit structure, it was necessary that our export trade should not be unduly hampered. Finally, it was desirable that as many individual plants as possible should be allowed to continue in operation, even though on a reduced scale, in order that they might be prepared to resume fullscale operations as soon as peace was declared. A complete shutdown would have meant permanent ruin to many of them.

The Priorities Board, acting in large part through, or upon the advice of, the technical commodities sections. of the War Industries Board, met these several considerations in an eminently practical way. As a basis for

all of its work it sought to classify the industries of the country according to their essential character. This classification was revised from time to time as conditions changed or new data came to light. The classification finally adopted and issued as Circular No. 20 of the Priorities Division of the War Industries Board, September 3, 1918, provided for the classification of all preferred industries into four classes known as Class I, Class, II, Class III, and Class IV, respectively, all other industries constituting in effect Class V, although not so designated.

Class I was made to consist of all industries of "exceptional importance" in connection with the prosecution of the war. They constituted the industries the requirements of which were to be fully satisfied in preference to those of any other class. Classes II, III, and IV comprehended those industries the requirements of which should be given preference over the industries not classified, that is, those falling in Class V. No complete or absolute preference was provided for as between these classes. The division into classes had for its purpose merely a general indication of the relative importance of the industries listed. It was not, for example, intended that the requirements of Class II should be fully met before any of the requirements of Class III should be met. The circular referred to thus stated:

It will often happen that after satisfying the requirements of Class the remaining available supply would be less than the aggregate requirements of the other three classes, in which event such supply will be rationed to the industries and plants embraced within those classes. In determining a basis for such rationing the relative importance of each industry and plant, according to its class rating, must be considered. has been found impracticable to prescribe for rationing purposes any general rule or formula, but the Priorities Board

It

will from time to time, after conference and in coöperation with each of the several govenmental agencies charged with the distribution thereof, determine particular principles, values and methods of applicatior, and labor, respectively, to the end that proper recognition and weight may, as far as practicable, in each case be given to the relative importance of Class II, Class III and Class IV.

In assigning the several industries to one or the other of these four classes the circular stated that consideration and weight were given not to any one but all of the following factors: (1) the intrinsic importance of the product itself for or during the war and the urgency as measured by time of the demand or the use to which it is to be put; (2) the necessity for maintaining or stimulating and increasing the total quantity of production which in turn depended largely upon the relation of the supply to the demand for essential uses; and (3) the proportion of the capacity of the industry or plant which was devoted to the production of the essential product. This work of classification was extended not only to industries as a whole, but to individual plants. Circular No. 20 then contained a long list of plants, classified by states, indicating for each the class to which it belonged.

This classification of industries and plants constituted merely the basis for the work of the Priorities Board in determining priorities. Currently the Board had to determine the priority that should be observed by industries and plants in the execution of particular orders. This it did by dividing all orders and work into five general classes, known as Class AA, Class A, Class B, Class C, and Class D, with subdivisions of each class indicated by suffix numbers, such as Class AA-1, Class AA-2, etc. Class AA comprised only emergency war

work of an exceptional and urgent character; Class A, all other war work; Class B, orders and work which, while not primarily designed for the prosecution of the war, yet were of public interest and essential to the national welfare or otherwise of exceptional importance; Class C, all orders and work not covered by priority certificates issued by the Priorities Board or war orders not taking an automatic rating; and Class D, all orders and work not embraced in any of the preceding classes.

The regulations issued by the Priorities Board required manufacturers to observe this rating in meeting orders placed with them. This meant merely that precedence should be given to orders of a higher rating over those of a lower rating only in so far as might be necessary to insure delivery on the date specified in the order. It did not mean that work should cease on orders of a lower classification except as necessary to enable orders of a higher rating to be completed within the time specified. Under this system it was necessary for individual firms desiring to have orders filled to make application to the Priorities Board for the issue of "priority certificates," which certificates would determine the order of precedence that would be observed by firms in filling them. It should be noted again, as above set forth, that this system of priority orders did not relate to food, fuel, transportation, or exports, all matters of priority in these fields being administered by the Food, Fuel, and Railroad Administrations and the War Trade Board, although these bodies, through their representation on the Priorities Board, sought to make their actions conform with those of the War Industries Board.

The classification of industries and plants according to their character from the standpoint of the essential

nature of their work and of determining priority in respect to the placing and execution of orders constituted but one phase of the work of the Priorities Board. Another phase consisted in the taking of such action in respect to each industry as would insure that the most effective use should be made of the materials secured by it and that it should be run with the maximum of efficiency, to the end that the industrial resources of the country should be conserved and directed to the meeting of the essential needs of the Government and the public. To this end one industry after another was taken up for intensive study with a view to the formulation of rules to be observed by them in the conduct of their business. The work done by the Board in this direction is excellently set forth in Circular No. 5, issued on July 22, 1918, prescribing the conditions to be observed by the iron and steel trade. Under the heading of "Rationing Industries," it said:

Rationing industries. — As it is obviously impossible to sup- Raben. ply all industries utilizing iron and steel in their activities with their normal supply, the War Industries Board, through its Priorities Division, coöperating with the commodity section dealing with the particular industry or product involved, with the Conservation Division and representatives of other interested Government agencies, has inaugurated a system of industrial hearings in which committees representing the entire industry appear and present (a) the normal requirements of such industry for iron and steel, (b) their reasonable requirements under war conditions, (c) the stocks now on hand in each plant, and (d) the fuel consumed, and all other pertinent facts.

A portion at least of the product of nearly every industry may be properly classed as a direct or indirect war requirement or essential to the civilian population, but in many the percentage of nonessentiality predominates. On the other hand,