Breadcrumb

Evolution: 1913-1995

The following is an excerpted chapter from the 1988 book From Lighthouses to Laserbeams: A History of the US Department of Commerce, available to read in full online through the Commerce Research Library.

On March 5, 1913, President Woodrow Wilson appointed manufacturing executive and politician William C. Redfield as first Secretary of Commerce. The Department, with its labor components detached, was composed of the Coast and Geodetic Survey, Steamboat Inspection Service, and Bureaus of Corporations, Census, Lighthouses, Standards, Navigation, Fisheries, and Foreign and Domestic Commerce.

The bureau offices were scattered about Washington in six separate places, some of them miles apart. Redfield complained that Fisheries "occupied an old structure which was a fitting victim for a judicious fire," and the Coast and Geodetic Survey "was placed but not accommodated in a group of ancient habitations near the Capitol."

Fiscal stewardship had become an important responsibility with enactment of the 16th amendment in 1913 giving Congress the power to levy an income tax, and Redfield's report on equipment transferred to Labor included a $5.00 horse blanket, a 50¢ hitching weight, and an 18¢ calendar stand.

Congress provided only $60,000 for "promoting commerce" and eliminated funding for domestic statistics. Nonetheless, Redfield undertook three major changes. A new force of commercial attaches, bilingual and with business experience, was created; industry specialists were sent abroad to make market studies; and Branch offices were opened in eight major cities.

Bureau Expansion

Redfield also actively supported expansion of the Bureau of Standards, convinced that "on the whole American manufacturers failed to apply science to industry."

World War I thrust both commercial attaches and scientists into the war effort to provide overseas data and develop strategic materials and equipment. Department vessels also assisted the military, one participating in disabling the German submarine that sank the Lusitania. Census records were used for information on the numbers of draft-eligible males and for data on the nation's manufacturing capabilities.

Even before the war, the Department of Commerce had initiated a campaign to recycle paper, beginning the first national salvage effort. Such campaigns became crusades with President Warren Harding's appointment of Herbert Hoover to head the Department in 1921. Known as the "great engineer," Hoover accepted the job determined to expand foreign commerce through greater productivity and better business methods.

His friend Oscar Straus, a former Secretary of Commerce and Labor, had told him that the office required only a couple of hours of work a day and "no other qualification than to be able to put the fish to bed at night and turn on the lights around the coast." However, Hoover, stating that for too long the Department had been a Department of Commerce "in name only," was to make it one of the most powerful in Government.

In 1922, Congress added to Commerce a Building and Housing Division. In 1925, the Bureau of Mines and the Patent Office were transferred from Interior. In 1926, Congress added an Aeronautics Division, forerunner of the Federal Aviation Administration. And in 1927, Commerce gained a Radio Division, which would be incorporated into the Federal Communications Commission.

Convinced that exports were a key to business stability, Hoover emphasized the Department's trade promotion activities. By 1925, American foreign trade had increased by one-third over that of 1913. By 1927, the Bureau of Foreign and Domestic Commerce was servicing 2,400,000 inquiries about potential markets. One of the Department's coups, described as the "Coals to Newcastle" miracle, occurred in 1922 when the Department of Commerce found a market in Japan for California's huge rice surplus.

Balance of Payments

The Department began balance of payments reporting in 1921 as part of Hoover's program to turn the Census Bureau into a "proper bureau of statistics," publishing the data in the first "Survey of Current Business." This reporting program evolved into the current comprehensive system of basic economic measurements.

Reference was made in the Department's 1928 annual report to a trend which would appear again in the 1980s, the occupation shift from manufacturing into mercantile, professional and personal service pursuits. The report noted that some 3,000,000 persons, in addition to those directly involved in automobile manufacturing, had jobs connected with motor cars (i.e. selling, servicing, accessories, building roads, and driving trucks, taxicabs and buses).

Departmental Safety Programs

During the twenties, the Department also participated in a number of programs to increase public safety. These included the development of national safety codes for protecting the heads and eyes of industrial workers and for the installation and use of electricity. The Department also assisted in the development of traffic signals and rules and standards for safe road and air travel, an expansion of its early responsibility for safe ocean travel.

Hoover's successes were evident in larger budgets for the Department, an increase from $860,000 in 1920 to more than $38 million in 1928, a period when other agencies were being limited.

Market Collapse

Hoover was elected President of the United States in 1928, but the Nation's bright economic outlook ended with the collapse of the stock market in 1929. Between 1929 and 1932, the national income declined monetarily by more than 50 percent, from $87.4 billion to $41.7 billion, and more than 40 percent in terms of goods and services. Exports fell 34 percent and imports 37 percent. U.S. foreign trade was at its lowest point since the 1913 creation of the Department.

Franklin Roosevelt's defeat of Hoover brought about a drastic reduction in Department activities. During Roosevelt's first year in office, the Bureau of Foreign and Domestic Commerce closed 21 of its 53 offices. Daniel Roper, Roosevelt's appointee as Secretary of Commerce, said that the Department "important under normal conditions, was at this time suffering from the fact that business was in the doghouse." New Dealers such as Sam G. Bratton, Senator from New Mexico, proposed a joint House and Senate committee "to consider the advisability of abolishing the Department of Commerce and the transfer of its indispensable services to other agencies."

The Department's main responsibility was administration of the National Industrial Recovery Act, intended to boost business by establishing minimum prices, but the Act was subsequently declared unconstitutional. Other agencies were responsible for the bulk of Roosevelt's business recovery program.

Transfers

Unable to support a Department reorganization in 1938, Roper left. The Bureau of Air Commerce functions were transferred to the Civil Aeronautics Authority, the Bureau of Lighthouses was consolidated with the U.S. Coast Guard at the Treasury Department, the Bureau of Fisheries was transferred to the Department of the Interior, where the Bureau of Mines had been placed in 1934, and the Foreign Commerce Service of the Bureau of Foreign and Domestic Commerce was transferred to the Department of State.

In 1940, the Weather Service and the Civil Aeronautics Administration became Commerce components. The effects of the war being waged in Europe were evident in U.S. trade figures which showed exports down by some 25 percent and imports by 20 percent.

Pearl Harbor brought the full forces of the Department into the World War II effort. Uniform standards to ensure absolute interchangeability of parts for airplanes, tanks and guns came from the Bureau of Standards working with the Bureau of Domestic and Foreign Commerce to increase war production. Pilot training programs by the Civil Aeronautics Administration were greatly expanded to provide Army and Navy flying cadet recruits. Commerce oversaw the National Inventors Council to expedite the screening of inventions and suggestions with national defense potential. From the scientists at the Bureau of Standards came the proximity fuze and an early version of the guided missile. Commerce became an essential source of maps, meteorological projections and other data.

War's End

At the war's end, Commerce became guardian to more than 3.5 billion pages of German documents and 300,000 pounds of German equipment and product samples. The National Technical Information Service grew from Government efforts to make the data available to American industry.

By 1949, export controls were being continued not to protect the domestic economy from a drain on important commodities, but for foreign policy and national security reasons. Commerce's Office of International Trade, concerned about the continued surplus of exports over imports, was emphasizing the promotion of imports so that other countries could earn more dollars. Greater foreign travel of U.S. tourists and businessmen also was encouraged as was investment of private capital in "sound foreign enterprises."

The Bureau of Public Roads was moved to Commerce in 1949 and the Maritime Administration in 1950. With these additions to its aeronautical functions, Commerce became the Government's principal transportation agency. Aviation was transferred in 1958, but highways remained and Commerce implemented the Interstate Highway Act in the 1950s. In 1967, highways and other land transportation responsibilities were moved to the new Department of Transportation.

The Korean War turned Department attention primarily to defense production and wartime allocation, while foreign trade was promoted outside the Communist-bloc countries.

Trade Agreement

The General Agreement on Tariffs and Trade, the compact policing world trade, was renegotiated in the late 1950s. American manufacturers began to face growing competition from abroad. Also during this period, Commerce assisted the Atomic Energy Commission in the design and production of a nuclear powered ship.

At the beginning of the 1960s, Commerce supervised U.S. participation in two world fairs, the Century 21 Exposition at Seattle and the New York World's Fair.

In 1961, the Department reported that world trade boomed to a record high, U.S. exports peaked at $19.9 billion. Imports declined to $13.9 billion. Two thirds of the decline resulted from curtailed imports of foreign cars. Americans were buying new U.S. made "compact" automobiles. The $6 billion favorable trade balance was more than double that of the preceding year, Secretary Luther Hodges warned, however, that the United States still faced serious problems in international payments. These included a sharp increase in the outflow of private capital, mainly shortterm funds, and a deficit in service transactions, such as tourism and shipping.

There was a sweeping reorganization of the Bureau of Foreign Commerce to concentrate on promoting exports. In June 1961, the first of five American overseas trade centers was opened in London. It recorded $1 million worth of sales within seven days. Department trade specialists participated in scores of trade clinics around the country. An Export Expansion Seminar in Baltimore resulted in $100,000 in international sales for a necktie manufacturer in less than six months. The President's "E" Award was created to recognize noteworthy export promotion by U.S. manufacturers.

Export Controls

The Soviet-bloc countries began to express interest in acquiring technical knowhow from the United States. Most of the requests were for chemical and petrochemical technical data. Commerce was responsible for export controls pertaining to U.S. national security and foreign policy objectives.

Through the National Defense Executive Reserve, consisting of more than 1,000 businessmen trained to keep industry and transportation systems operating in a national emergency, Commerce monitored industrial preparedness.

The early 1960s were a time of acceleration for the Interstate Highway program being managed by the Department's Bureau of Public Roads. With a 1972 target date, the Bureau reported that 25,724 miles of the planned 41,000 mile system had been improved or were being worked on. The Bureau also reported on the National Driver Register Service for participating states. The register, operated on a voluntary basis, was a file on motor-vehicle operators whose driving privileges had been withdrawn for driving while intoxicated or for conviction of a violation involving a traffic fatality. Forty-seven States were in the program.

Highway Safety

Highway safety was another function of the Bureau, which sponsored studies on highway design and the physical and psychological aspects of driving. A report on accidents on rural roads showed that young drivers had high accident involvement rates. Less expected was the finding that low travel speeds were directly correlated with high accident involvement.

Two new programs began in Commerce in 1961, a pilot project for economic development below the national level and the promotion of foreign tourism to the United States. The pilot project became permanent with the establishment of the Economic Development Administration in 1965. The U.S. Travel Service was a forerunner of the U.S. Travel and Tourism Administration created in 1981.

Passage of the Civil Rights Act of 1964 brought the Community Relations Service to the Department of Commerce. The agency was transferred to the Department of Justice two years later.

In 1966, the Maritime Administration reported that 101 ships had been withdrawn from the National Defense Reserve Fleets to carry supplies to American military forces in Vietnam. In 1968, by Presidential directive, the Secretary of Commerce was charged with reducing foreign direct investments by $1 billion.

Four Percent for Trade

The Department in 1969 was composed of 16 agencies with 25,400 employees. Less than four percent of the budget was directed toward the stimulation and regulation of international trade.

With the change of administration, Commerce initiated a minority business enterprise program, an ombudsman for business was established, an Office of Telecommunications was added, and the National Oceanic and Atmospheric Administration, consolidating Commerce programs and those of five other agencies, was created.

These changes increased the size and scope of the Department for the first time in many years. By 1972, there were 35,000 employees. In 1971, the U.S. suffered its first negative balance of trade since statistics had been kept.

East-West trade was promoted during the early seventies, as trade barriers against the Soviet Union were relaxed. There were also overtures to the People's Republic of China and to portions of Eastern Europe.

In 1974, the National Fire Prevention and Control Administration became a Department of Commerce agency. In 1979, it was transferred to the Federal Emergency Management Administration.

By the end of the decade, the United States had imposed trade sanctions on the Soviet Union.

Leadership

In the 1980s, under the leadership of Secretary Malcolm Baldrige, the Department of Commerce again became a major force in national policy making. The International Trade Administration was strengthened with new trade promotion and policing powers. The Commerce Secretary was named by the President to chair a Cabinet-level Trade Strike Force to search out unfair trading practices and recommend corrective measures.

Commerce took a lead role in supporting passage of the Export Trading Company Act of 1982 to provide new export-related jobs by allowing small- and medium-sized businesses to enter exporting.

In one six-day stretch in June 1985, Secretary Baldrige held trade conferences with General Secretary Gorbachev of the Soviet Union, Prime Minister Gandhi of India, and Premier Zhao Ziyang of the People's Republic of China.

Modernization Program

At the mid-1980s, the Department's modernization programs included automating the patent process, updating the weather service with advanced spacecraft for the nation's civil satellite systems, and developing the factory of the future.

In October 1987, a Bureau of Export Administration was added by Congress to handle licensing and export enforcement. Of the agencies originally assigned to the Department, three, the Coast and Geodetic Survey, renamed the National Ocean Service, the National Bureau of Standards, now the National -Institute of Standards and Technology, and.the Census Bureau remained.

In 1995, the Department of Commerce, with programs newly created and streamlined and others as resilient as the Constitution, was helping the Nation, its communities, businesses and individual citizens meet the challenges of economic growth and a new global economy.

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