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The Urge To Arm

( Originally Published 1952 )

'The biggest economic danger faced by America is a sudden turn to peace by Russia.'

U.S. News & World Report January 14, 1949.

'The Korean cease-fire proposals, coming at a time when business in many lines was already experiencing indigestion . . . have intensified the feelings of uncertainty that have been spreading through the business community.'

Monthly Letter,

The National City Bank of New York August, 1951.

THE OUTBREAK OF THE KOREAN WAR, FOR SOME TIME AT LEAST, improved America's grim economic prospects.

`It's really a made-to-order situation to keep business at a high level', U.S. News & World Report wrote a month after the conflict began. 'The Korean outbreak lays the ghost of depression that has been haunting buSiness in the U.S. since the end of World War II. Outlook is for an extended boom.'

`One thing the Korean crisis assures', Business Week Stated at the same time, 'we aren't going to have to worry about any buSiness decline of serious proportions. . . . SupplieS that looked like surpluses yesterday are needed reserves today.'

'Many of us are aware, with a profound feeling of guilt, that the Korean war and the satisfactory state of businesS bear more than a caSual relationship to each other', read a report from America in the New York Herald Tribune (international edition) of September 6, 1950. 'The G.I.'s at Waegwan and Pohang are dying not only for our country but also, in a sense, for our prosperity. . . . We can now breathe easily, for the depresSion that has been hanging over our heads since the end of the last world war has been dispelled by the Korean war.'

It is only natural under such circumstances that peace prospects must have an unsettling effect on an otherwise peace-loving buSiness community. 'Grains Nervous On Peace Rumors', Stated the New York Times on January 17, 195r. 'Wall Street has been buzzing with "peace scares" for dayS', Business Week wrote on March 10, 1951. Wondering whether 'we have reached a turning point in the long drawn-out East-West feud', on the occasion of the call for a conference in Paris of the Big Four, the paper wrote again on April 14: 'In the U.S. the speculation has produced the "peace scare";' for even with the fresh armament boom there were, as it noted a week earlier, 'enough adverse factors—big inventories . . . heavy personal debts . . . to send us into a tailspin (not just a 1949 dip)'. 'Sudden peace could work havoc with business', wrote the New York Times of May 19, 1 9 5 1.

'Peace scares' have occurred frequently since the failure to solve the eternal depression problem—either through reform of the economic order or through increased exports—steadily enhanced the reliance of business on ever increasing armament orders.

Most Americans do not quite realize the tragic cleavage between the inescapable logic of 'free enterprise' that makes peace an economic problem and the universal need and wish and hope for peace, which they fully share. For, what little is revealed in print about the fear of the economic consequences of peace appears in the trade magazines and the commercial pages of the daily press which ordinary people do not read. There, 'peace scares' have been frankly acknowledged ever since President Truman greeted the end of the second world war as a `great emergency'.

`Peace Scare Sends Stocks Down', headlines would read, or 'Peace Rumors Disturb Markets'. A slump would threaten when the international atmosphere cleared a little, and the telephone lines to Washington would buzz with anxious inquiries. But peace scares have never lasted long; and the business press, in the semi-secretness of its technical language, would chronicle their passing in the same matter-of-fact terms in which it reports the end of the threat of good harvest weather to wheat or cotton prices. 'The "peace scare" (which would cut the armament cushion to any business easing)', read a typical New York Times report in the column 'The Merchant's Point of View' on November 14, 1948, 'was scotched pretty well toward the close of the week when word came from Key West [the naval base where the President was vacationing] that there was to be no meeting between Messrs Truman and Stalin. . . .'

Or someone would analyze the long-term trends of the American economy and the effect peace would have on it, as the editor of U.S. News & World Report did on January 14, 1949: 'It is obvious that armament expenditures have given America a false prosperity. What a devastating blow the Kremlin could inflict if it decided to end the "cold war" . . . it would be difficult to sustain the proposition in Congress that $15,000,000,000 or more must be spent annually for armament. Hence the paradox that the biggest economic danger faced by America is the danger of a sudden turn to peace by Russia. . . . The truth is that the United States has never really adjusted itself following the economic convulsions of 1929. . . . The depression of 1929 to 1939 was not solved. . . . Only when the war broke out in Europe in 1939 amd America became the "arsenal of democracy" with billions of Lend Lease and then actual participation in the biggest industrial operation in all history did unemployment disappear.'

Just as the war alone had solved the economic crisis of the thirties, armaments have continued as one of the main props of America's post-war boom. So it would have to remain; for, as the same paper wrote again on April 22, 1949, 'armament is the basic pump priming mechanism for assuring prosperity in the future'.

An important official voice—contradicting the usual theory that the Soviet Union wanted depression in the United States, rather than fearing it as the very motivation of what Moscow calls 'the capitalistic tendency toward militarism, imperialism and war'—confirmed the nation's fatal dependence upon armaments. 'If the practitioners of communism had not thrust us back into the danger of war, we would soon have been thrust forward into the difficulties of peace', Dr Edwin G. Nourse, chairman of the President's Council of Economic Advisers, said in a speech on December 10, 1948.

There is still another reason why it is only natural for business to be suspicious of real peace, why 'you can no longer leave the possibility of better relations with Russia completely out of your calculations—even though the current maneuvering seems to get nowhere [and] Stalin's "peace feelers" have been brushed aside', as Business Week warned on February 12, 1949. -

World-wide peace would threaten business not only with the loss of badly needed armament orders but also with fresh popular demands for basic reform, with increased pressures for more government spending on housing, education, health and social security, for legislation aiming at government controls of Big Business, at full production, full employment and better distribution of incomes and tax burdens.

While the Cold War lasts, Business Week went on to explain, 'the prospect of ever-rising military spending acts (1) as a sort of guarantee against any drastic deflation of the economy; (2) as a ceiling on the ambitious social-welfare projects' handed down by Roosevelt. For, if peace were to become more real and armaments no longer primed the pumps of the sagging boom, the Government would have to try to prime them with large state expenditures to cover the people's many unfilled needs.

'There's a tremendous social and economic difference between welfare pump priming and military pump priming', the paper continued. 'It makes the government's role in the economy—its importance to business—greater than ever. Military spending doesn't really alter the structure of the economy. It goes through the regular channels. As far as a businessman is concerned, a munitions order from the government is much like an order from a private customer. But the kind of welfare and public works spending that Truman plans does alter the economy. It makes new channels of its own. It creates new institutions. It redistributes income. It shifts demand from one industry to another. It changes the whole economic pattern. That's its object.'

Priming the pumps with armaments, Uncle Sam is merely a rich, reliable customer of business who deals with his suppliers on a footing of equality, knowing that he has to pay profitable prices for the goods he wants. Or, rather, he is the silent partner of the big corporations, ready to share with them his inventions, his facilities, his very fortune; to put up research and pilot plants and even full-sized factories for them; to allow them tax and other privileges, bear for them part of the cost of technological progress, and assist them in whatever other ways they might desire.

Moreover, in times of great armament activity, business is more or less expected to take charge quite openly of the nation's economic fate. `Industry should lead, not follow, in plans for the nation's security', Major-General Everett S. Hughes, the Army's ordnance chief, told the New York Times on August 29, 1946. 'Ninety per cent of the initiative should come from industry, and the word "warmonger" should be blotted out.'

Uncle Sam as a buyer of armaments can also be trusted to employ the right type of officials to represent him in his dealings with business, to ask the corporations to lend him some more of their own men in order to secure efficiency and harmony.

All this would of course be different if the necessary pump priming were to be done by raiSing the people's living standards and insuring full employment and social security. In that case Uncle Sam might show the side of his personality that is reminiscent of Abraham Lincoln: stern, strict, and stingy with the taxpayers' money, full of social principles and inclined to lead rather than follow business. He would channel some of his 'pump priming' funds directly into the people's pockets through insurance benefits and tax rebates and dispense the rest through officials of the New Deal and Anti-Trust type who would again be able to pride themselves on their mission of preserving capitalism by controlling its Suicidal tendencies.

Those 'long-haired do-gooders' would be much harder to deal with than the military men and the industrialists-turned-administrators who staff the munitions boards and war-economic agencies. They would try, as in the thirties, to tell business executives of what to produce more and of what less, and to seek their advantage in high volume production at low profit, rather than in minimum output at maximum prices. They would attempt to enforce dormant New Deal laws and get new ones passed by Congress—until some day they might succeed in putting private enterprise into a semi-socialist straitjacket, by some kind of 'planning' or even by nationalizing some of the key industries, as Labour did in Britain. And worse would follow. After all, wasn't it still true that 'Communism is only the New Deal in a hurry', as the saying went in the thirties?

Meanwhile there has been no real danger of any of this coming to pass.

Ever since the second world war, military expenditures have remained the largest single source of business. Even before Korea, on an annual average, they were larger than the nation's total export trade; several times as great as the purchasing power that came on the market through benefit payments from the social insurance funds of the Federal and state governments; as great as all annual purchases in the world's richest community, New York City, with its eight million customers. -

In 1947-8, at their lowest, military expenditures still were eight times as high as during the average last five pre-war years. By 1949-50 they were ten times as high as pre-war, amounting to about $13 billion, or $10 billion more than it had cost America to fight the first world war during the climactic year of 1918-19.

Including the costs of 'foreign aid', one year of Cold War fighting before Korea cost as much as an average three months' actual fighting in the second world war, about one-half of the nation's peacetime budget. Altogether, 'over three-fourths of the budget is due to international events', President Truman stated on July 14, 1949, while 'less than one-fourth arises from the domestic functions of the government'. By 'international events' he meant the wars of the past with their continuing dues on debts and veterans' pensions, the Cold War, and preparations for the third world war.

The pre-Korean Cold War cost took as much of the people's money as all their expenses on health, recreation, political, religious, philanthropic and other 'welfare' activities.

Some 5 to 5 1/2 million Americans, in the late forties, were serving the armed forces directly or indirectly—five or six times as many as in 1939. About half of them were soldiers, sailors, airmen and office personnel of the fighting services. The other half produced their vast military supplies. The labour force in the military sphere was fully as large as that engaged in all iron and steel plants, electrical and other engineering works, automobile, aircraft, household furniture and chemical industries together. And three-quarter million workers and farmers were busy producing goods for foreign aid.

This is what America devoted to the Cold War during the years before Korea: nearly x out of every 2 Federal tax dollars or around $20 billion on an annual average; the work of i person out of every 10 in the employed labour force; and about one-tenth of the annual production of all goods and services in the United States, leaving out of account the billions of dollars industry was induced and helped to spend on re-equipping itself for dealing with more armaments.

Yet business clamoured for more and faster military pump-priming as the post-war boom weakened, surpluses piled up, and depression threatened.

'The present demand from industry for early action on rearmament contracts indicates a desire to cushion large plants against a possible recession', the New York Times quoted 'several executives' on August 29,1948. This desire has been prevalent not only in the actual armament business but also in the consumers' industries. In the spring of 1948, the same paper reported, total bids received by the New York purchasing office of the Army's Quartermaster exceeded the needed quantities of food, cotton textiles and clothing up to seventeen times, because of 'the lag in civilian business' which las made the Army business appear attractive. . . '

The military and business have co-operated closely on preparing for what came to be officially called M-Day--Mobilization Day. These preparations, psychological as well as material, started very soon after VJ-Day, long before the name 'Cold War' was coined.

'Industry must be prepared to meet a surprise attack with the ability to produce and produce under difficult and probably under dangerous conditions', Kenneth C. Royall, Under Secretary of War, told the National Federation of Sales Executives' on May 22, 1946—a few monthS after General Marshall, the Chief of Staff of the U.S. Army, had assured the nation that, 'for the first time since assuming this office six years ago, it is possible for me to report that the security of the United States is entirely in our own hands'. Mr Royall added that the only alternative to an economy 'directed primarily toward war' was for 'industry itself to be conscious of the need for preparation, and for industrial leaders voluntarily to conduct their businesses with a fair consideration of the possibility of a future conflict'.

At a time when entire American divisions were still on the recent battlefields, when much of Europe and Asia still lay in ruinS and many American war-dead had not yet been brought home for burial, alarming headlines began to condition the nation for fresh armaments.

In 1946, the year following the end of the war and the birth of the United Nations, these—culled from responsible newspapers like the New York Times, the New York Herald Tribune and the Wall Street Journal—were typical: 'Industry Planning For War Is Urged—General Hughes Asks Move At Once To Disperse Or Go Underground'. . .. 'Army Would Save Ordnance Plants—Enough of Industry Should Be Kept To Meet Any New Crisis'. . . 'Industry Jobs To Be Assigned Naval Officers'.

In 1947, when every potential foe of America still was near-prostrate with war wounds: 'Ordnance Makes Ready For Orders—U.S. Must Be Prepared'. . . . 'Training Of Industry Leaders, Educators In Armed Forces College'. . . . 'Industry Studies "War Games" Plan—Leaders Aim For "Full Dress Rehearsal" Of Mobilization Following Somervell Plea'. General Somervell of world war fame, incidentally, now was president of the heavy-industrial Koppers Co. of Pittsburgh; and another high officer who joined the General's plea that 'an advance plan of industrial mobilization must be adopted immediately' was now Vice-President of the famous Sperry Gyroscope Corporation, in whose warplants at Lake Success the United Nations shared quarters with workshops engaged in secret war production.

In 1948, when America still held the monopoly of the atom bomb: `Americans Must Learn Facts Or Perish, Officer Declares At Mobilization Course'. . .. 'Mobilization Guide Issued To Industry'. . . . `Munitions Board Is Speeding Plans For Mobilizing Nation's Industry' . . . . 'Swift Mobilization Aim—Industry Leaders Hail Program'. . . . 'New Group Seeks Continuous Cooperation Between Armed Forces And Industry' ('the first time in U.S. history that armed forces and industry have started to cooperate for economic mobilization before the actual beginning of a national emergency') . . . 'Radioactive Cloud Held Top Weapon—Sixty Days' War Forecast'.

In 1949, when the fear of depression rose high in America: 'Munitions Board Drops Bowing To Peace Economy In Scarce Materials Quest'. . . . 'Cold War Buoys Plane Industry—Military Only Major Market Left'. . . . '800 Industrialists Aid Mobilization—Overnight Conversion To War Is Aim'. . . . 'Capital On Rails In Atomic War, Legislation By Television Urged'.

So it went on in 195o, before Korea: 'Defense Buying Hits Stride—Business Is Feeling Maximum Impact of Military Spending'.. . . 'Mobilization Plan Urged By Bradley—"Bold Program" Would Include Entire Economy'.

Gradually, the military and business were becoming one in a budding garrison state that provided ever increasing strength and power for the armed forces and ever increasing orders for industries badly in need of them. Where there was not sufficient enthusiasm for the new war economy, in small business, threats were being used. 'Should you be unprepared in time of emergency and unable to participate in production of essential goods, there would be no way in which you could be protected', stated the 'guide for business to potential mobilization' of the Munitions Board (New York Times, June , 1948). 'Unless you can shift to essential production, your supplies of raw materials might be cut off and your labour force drained away. "The very existence of your company might hang on your preparedness for the emergency".'

'Every major manufacturing concern that would be called on to produce military material . . . has firm orders to get under way on such a programme immediately after an M-Day (mobilization) signal', the New York Herald Tribune quoted the Munitions Board on September 5, 1949. 'This production counterpart of the military establishment's ready-for-instant-action combat striking forces is, of course, only the spearhead phase of the nation's comprehensive industrial mobilization program over which the National Security Resources Board exercises general supervision. . . . This plan, which has the advantage of being not only "on paper" but in active practice, is providing for the training of military specialist reserve units in scores of industries throughout the country. . . . At latest count, the Army had nearly io,000 such specialists organized in 1,263 industry-sponsored and industry-armytrained "affiliated units" ranging from company down to squad size or less.'

Just as armament orders served to prime the pumps of depression-threatened industries, the recruiting propaganda of the armed forces frankly recommended military service as a solution to the problems of unemployment, economic insecurity and unfilled wants, which plagued millions of young Americans. In the late forties the news pages of the daily papers were interspersed with strikingly placed 'want ads' like these:

'MEN 17 TO 30. There are no lay-offs, no seasonal slumps, no pay cuts in the Navy. The men who want security and a career are enlisting or re-enlisting in the regular Navy now. For full details, go to your nearest Navy Recruiting Station.'

'GOOD PAY, housing, clothing and food are advantages in new Regular Army. Enlistments for eighteen months, two or three years accepted. Details at 39 Whitehall or nearby substations.' `CONDUCTED TOURS available to men 17-34, of Switzerland, Norway, France, other foreign countries. Complete details at Army Recruiting Stations. Apply now.'

United Press gave this news item from Cincinnati, Ohio, on October 14, 1949: "Sixty men wanted, aged seventeen to twenty-three, for part-time work at $1.25 and up", read a newspaper advertisement here last night. One hundred and fifty men reported and indignantly discovered they had been lured to a National Guard Recruiting Station. The operation netted twelve recruits.'

The developing garrison state also required a new kind of morale among the civilian population. This was one of the reasons for the `loyalty tests' and purges of government officials, the 'non-Communist affidavits' demanded of all labour union functionaries, the spy and treason trials, the persecution of artists and scientists and publicists for Un-American activities', the posters all over the country, inviting people to keep their eyes and ears open and inform the F.B.I. immediately of suspicious conversations, and the lurid press coverage given to the ideological Cold War at home.

`War scares' were an equally important part of this morale campaign, and they usually had little to do with what went on at the time in the outside world.

One kind of 'war scare' was caused, as it were, by self-ignition, by the ever increasing intensity and urgency of American rearmament, for which the man-in-the-street and many a businessman outside the actual armament field could see no other explanation than that a new world war must be around the corner. 'A new wave of war scares is breaking out, based on what is going on inside, not outside, the United States', wrote U.S. News & World Report on November 28, 1947. 'Speculation centres on big U.S. orders for war materials. . • . Rumors are circulating, too, about giant underground factories and stored wartime planes quietly made ready for action.'

The other kind of 'war scare' was purposely raised to facilitate the passing through Congress of appropriations for armaments and Cold War policy measures.

Military leaders, giving confidential information to the uninitiated in the business community, often took a hand in creating the impression that America was actually on the brink of war. 'One executive who had just returned from a three-day conference with top officials in the national defense agencies', a report of the New York Times quoted a business firm on April 5, 1948, 'remarked with reserved awe that he feared war was now inevitable.' This was why 'warnings against using war scares as a basis for the formation of business policies were privately circulated in heavy equipment industries here last week, top executives revealed. They particularly stressed dangers of over-buying or inventory speculation. ... Executives in leading companies disclosed that they are seriously concerned about trends toward "war hysteria".'

Those business leaders did not know how close America had drifted to a third world war, at the very time when they uttered this warning. The revelation came some six months later. 'In the spring of 1948 a mistaken intelligence estimate ... stimulated recommendations which —if followed—might well have had serious consequences', reported the Hoover Commission's sub-committee on the National Security Organization on December 16, 1948, in the course of its efficiency investigation of various branches of government. `. . . presumably war. . . ', was how the New York Times interpreted the term 'serious consequences'. For the 'mistaken intelligence' concerning alleged Soviet troop movements in Germany had been 'biased and subjective', mistaking the 'capabilities of potential enemies for their intentions'.

Nor were Americans, during those early 'war scares', aware of the tragic mental state of one of the most important men behind them, Defense Secretary James F. Forrestal—until one night in the following winter, clad in pyjamas, he rushed from his bed into the park of a country house where he was staying, to chase imaginary Soviet paratroopers; or until, soon afterwards, he committed suicide by jumping from the window of his hospital room.

This was the period of acute deterioration in world affairs—when a 'flash war' to knock out an easily identifiable 'enemy' within one month was blueprinted for the U.S. Air Force by Colonel Dale 0. Smith in the Quarterly Review of its Air University .. . when the Federal Security Administrator, trying to 'sell' Congress on the government's health programme, had to keep up with the times by stating that `fortunately, the steps that we should normally take for economic and social progress are, in matters relating to health, the same steps that we would take to be prepared for a national emergency' ... when the trade union leader Walter P. Reuther tried to support his plan for the production of millions of urgently needed pre-fabricated houses by suggesting that they be made in vast, government-subsidized airplane plants kept ready for immediate conversion to war purposes . . . when stock exchange tip sheets advised customers on 'What To Do With Your Money And What Stocks To Buy In Case of A Sudden War—In The First 10 Days—In The Second 10 Days' . . . and when few but some hundred-forty million plain, nameless citizens of the United States seemed to keep their sanity.

'Power-hungry men in uniform', as Major-General Meritt A. Edson, USMC (Ret), called them in an article in Collier's magazine of August 27, 1949, played an increasingly important role in Washington.

'While the attention of most Americans has been focused on Europe's Iron Curtain, the shadow of another curtain—a Brass Curtain raised in Washington's Pentagon Building—is spreading over the nation', the retired General wrote. 'Behind it, continuing efforts are being exerted to fashion an American replica of the Prussian general staff system which destroyed all vestiges of democracy in the German nation, which plunged that country into four wars within three quarters of a century, and which has left Europe devastated, police-ridden and bankrupt... . Wherever this type of military organization has appeared, the result has been the same. As night follows day, its adoption has been followed by the loss of individual freedom, the destruction of democracy, and poverty for the people who are stripped to meet the ever-mounting costs of armament. It seems to work well in the early days of a war. But within the era of the generation which creates it, there have always come ignominious defeat and national disaster.'

As time went on, the well-informed business press got advance knowledge of impending official 'scare operations' by which the masses of the people and their tax-shy representatives in Congress were to be conditioned for fresh sacrifices. 'War scare is having to be drummed up again to excite interest in a gift of arms to other nations', U.S. News & World Report on August 5, 1949 told its business readers. 'War talk is artificial, phony, but it is regarded as necessary to get Congress stirred up enough to produce a favorable vote.'

'War scares' followed war scares whenever fresh armament or Marshall Plan appropriations came up for debate in Congress, and the results became more and more alarming. 'Dean Acheson, Secretary of State, is responsible for the shift in U.S. foreign policy away from dependence upon regular war alarms to keep the American people stirred up', the same paper reported on November 18, 1949. 'If U.S. keeps up its large-scale aid to the outside world, it will be on the basis of a considered decision and not as a result of officially inspired cries of war just around the corner.'

But that shift never took place. On April 8, 195o, Business Week cautioned its readers: 'don't be surprised if the Administration resorts to phony war crises to get its way in Congress on foreign-policy legislation'. And again, on June 10, 1950, during the great wave of war hysteria immediately before the Korean war : 'This week's crisis atmosphere was created to push the $1.2 billion of second-year arms aid [to the North Atlantic Pact nations]. . . . The technique is familiar . . . the old Washington habit of relying on "emergencies" to whip up public backing for controversial issues.'

There was apparently little thought among those in Washington who launched these 'war scares', among the businessmen who demanded armament orders which could be financed only if wave after wave of hysteria pried loose the necessary funds from a Congress aware of the people's un-warlike mood, and among those who, with their intermittent 'peace scares', again and again confirmed the dependence of America's economic order upon an ever increasing armament business and therefore upon ever growing international tension—that all this was bound to have extremely dangerous repercussions on the hostile forces facing each other across the actual front lines of the Cold War.

This was one of the reasons why so many in America were surprised by the outbreak in Korea.

Big Business has benefited greatly from the consequences of the Korean war.

The quickly maturing garrison state has given it more power than it ever had in peace or war. 'Businessmen . . . are taking over the job of running the U.S. economy, of devising and applying new controls', U.S. News & World Report wrote on February 9, 1951. 'These men, who are on leave or have resigned from their companies, dominate the new agencies created to keep production running smoothly, slow the advance of prices and stabilize wages.' Different from conditions during the second world war, when 'New Deal politicians, lawyers and economists tended to take command, .. . the business phalanx is taking charge. . . . Executives are delighted.'

As during the second world war, when 100 corporations received 67.2 per cent of the total volume of war contracts, according to official figures, the giants are again obtaining most of the armament business. 'Ten large corporations got more than one-fourth of all the Government's multi-billion-dollar defense business during the first nine months of the Korean war', United Press reported on June 23, 1951.

Military orders grew to tremendous proportions. By the spring of 1951, the Government placed contracts at the rate of $5 billion a month, according to a statement of the Office of Defense Mobilization of March 16. This was exactly half as much as the nation's entire retail trade.

The new, high-volume armament business seemed to take on the character of permanence that may almost free it from the uncertainties of Congressional moods, of 'peace scares' as well as 'war scares', and establish it as a strong and lasting 'floor' under the American economy.

'Over the years ahead, regardless of who is President, the Government's top forecasters expect that defense spending never will fall below 40 billion dollars a year', U.S. News & World Report wrote on January 25, 1952. 'Armament, to them, is a vast and permanent new industry that will transform the business outlook for this country. . . . Good profits. Lots of business. No hard times. Defense spending will see to all that.' Again, on March 14, 1952: 'Defense in the United States is to be a 20o-billion dollar industry . . . a gigantic undertaking .. . important to U.S. business for at least 15 years in the future.'

Money for armament orders promises to remain plentiful, both from new appropriations and accumulated, unspent funds. The Joint Committee on the Economic Report gave these figures on February 20, 1952: 'Major national security' expenditures were $12.9 billion in 1949-50 (before Korea), $26.4 billion in 1950-1, $50.7 billion in 1951-2 and will be $66.4 billion in 1952-3. But the Committee estimated the 'total available funds' of the armed forces, including as yet unspent money, at $120.6 billion for 1952 and at $134.6 billion for 1953. By comparison, all 'major national security' expenditures before the war, in 1939, were $1.3 billion. Even at the height of the second world war, in 1944, they were no more than $87.4 billion.

Most important of all, it has gradually become the accepted policy doctrine that armament orders are to be handed out according to economic—rather than military—needs. This explains the frequent fights in and out of Congress about the amount of appropriations for armaments and 'foreign aid'. It is largely based on differences of opinion about the volume of 'pump-priming' the economy requires at a given time, about the size of the 'pool of unemployed' that is supportable or desirable. Differences on the foreign and military policies which the appropriations for arms and foreign aid are to sustain are therefore 'often merely secondary motivations in such controversies.

Washington's practice since 1951 confirms the correctness of this summary by U.S. News & World Report of March 21, 1952:

'Armament is to become more and more a pump-priming project. Arms money tends to be turned on or off, to be directed this way or that, depending on economic weather vanes. Armament, as the planners see it, can become the great stabilizer of the future.

'Arms race is something of a phony. Instead of sprinting to get arms with which to win, attention is on jogging along, using arms money to keep business on a fairly even keel.

'Economic effects and opportunities in arms are getting more official attention of planners than the military effects. The planners figure they've really got something in arms money.

War itself obviously is to go on simmering.'

So are the dangers into which America is drifting, and, in her wake, the world.

The danger of ruinous inflation: 'inflation is the enemy which wipes out our tanks, our guns and our planes as ruthlessly as any Chinese or North Korean army', Charles E. Wilson, Director of Defense Mobilization, said on April 27, 1951. 'For every $10,000,000,000 appropriated by Congress for rearmament we have lost $2,000,000,000 through the inflation of costs . . . a casualty loss of 20 per cent.'

The persistent danger of depression—still sporadic but constantly spreading, requiring more and more military pump-priming and therefore more and more inflation, thus mercilessly paving the way for a general economic crisis: 'Unemployment is acute in some parts of the country ... whole groups of people feel hard up ... real depression is present in some industries and some lines of trade . . . the mixture of boom and recession, in other words, runs all through the economy' (U.S. News & World Report, February 15, 1952). 'Most businessmen [are] more worried about slack consumer demand than the impact of materials shortages' (New York Times, September 24, 1951). 'There simply has not been nearly enough military work to take up the slack. ... Buying resistance, in fact, is so great that makers of durable goods are not at all sure they want the increased allotments of [relatively scarce raw] materials. . .' (Newsweek, March 24, 1952).

And finally the worst danger—of which Walter Lippmann warned on February 27, 1951—that America might make the great military mistake which has ruined so many other nations. It is to arm past the point of no return. It is to create armaments that are so heavy to bear that they must be used in the hope of getting rid of the burden.'

For, 'wars that are inspired not by self-defense or by clear policy, but by internal pressures and irrational hopes, invariably end in ruin and disaster'.

'Will business men be left holding the bag when defense spending eases up? Many of their private economists and analysts say so. They think the bottom will drop out of the market when the Government reduces its large expenditures, to the ruin of those who expanded plants and filled warehouses.' (Associated Press, from Washington, August 9, 1952.)

The World The Dollar Built:
The World The Dollar Built

Corporate Power

The Captive Audience

Business Of Government

The Dangerous Drift

America Needs Foreign Aid

The Urge To Arm

Cold War At Home

Too Little - But Too Much

Income Pyramid

Read More Articles About: The World The Dollar Built

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