Nineteen forty-nine proved a defining year for the Cold War and for Eisenhower. On 29 August, the Soviet Union detonated its first atomic bomb and ended the American atomic monopoly. To meet the new Soviet threat, Truman took action. On 28 September, the president and the Congress agreed upon funding to create a new anti-communist defense alliance, the North Atlantic Treaty Organization. In addition, Atomic Energy Commissioner Lewis Strauss wrote President Truman on 25 November to encourage immediate action to build the thermonuclear bomb. The following January, Truman announced America’s intention to build the hydrogen bomb with all possible speed.²⁷

In early 1950, the National Security Council began work on what eventually became NSC-68, a document which helped reposition the United States to fight the Cold War. The NSC agreed that the United States now existed in a perpetual state of war and the nation needed to respond accordingly. The Soviet Union and international communism constituted a hostile and immediate threat that demanded a massive military buildup in the United States as well as the mobilization of American society for this new conflict. “We must, by means of a rapid and sustained build-up of the political, economic, and military strength of the free world, and by means of an affirmative program intended to wrest the initiative from the Soviet Union,” the document explained, “confront it with convincing evidence of the determination and ability of the free world to frustrate the Kremlin design of a world dominated by its will.”²⁸

Ever the professional American soldier, Eisenhower avoided getting too involved in the partisan political debates over these momentous issues. He spent much of this time fending off requests from friends, associates, and others for him to enter politics. Then, on 25 June 1950, North Korea invaded South Korea, and, like many others, Eisenhower became greatly concerned. “I have no business talking about the basic political decision (to support or not to support South Korea),” Eisenhower wrote in his diary, but “I believe we’ll have a dozen Koreas soon if we don’t take a firm stand.” What the United States needed now was proper strength. “Remember, in a fight we (our side) can never be too strong,” he continued, “we must study every angle to be prepared for whatever may happen even if it finally came to the use of an A-bomb (which God forbid).” On 6 July 1950, he traveled from New York to Washington to testify before a Senate subcommittee and to meet with various officials including General Marshall, who would soon become secretary of defense, and President Truman. He reminded the Senate that it was vitally important that nations of the world know something about our “latent strength” and later told the president of the need gather support quickly and to build strength for the intervention in Korea.²⁹ American, South Korean, and United Nations forces under General MacArthur seemed to take Eisenhower’s advice to heart. A landing at Inchon in September 1950 turned back the North Korean advance, and MacArthur pushed the enemy back across the 38th parallel. With imminent defeat avoided and a stalemate emerging, Eisenhower grew increasingly concerned with the Truman administration’s fiscal policies and the subsequent effect on America’s ability to wage the Cold War.

b. In the Land of the Controlled Economy

To meet the threat in Korea as well as any future threats, Truman planned to augment U.S. military capabilities. He sent immediately to Congress a $4 billion supplemental spending request to support expansion of the Army, Navy, and Air Force as well as the Atomic Energy Commission. When he submitted the budget for fiscal year 1951, the president requested a total of $69.5 billion for a variety of national security requirements. The president forecasted he would request $56 billion for the following two years and $45 billion for 1955, assuming that the war in Korean ended in June 1951. He believed that an increase in expenditures for both conventional and atomic forces best prepared America for the long haul.³⁰ Eisenhower was disheartened. “Some of these officials think we can buy security,” he commented, “solvency and security can scarcely be separated, yet I hear talk of $55 billion a year for several years. Tragic.”³¹ To meet these security needs, the nation would need to borrow money to produce military hardware and wage war which could cause inflation and result in supply shortages. Eisenhower worried that to relieve these economic pressures in the interest of war the government would likely raise taxes, fix prices and wages, and maintain tighter control over credit.³² The free market economy soon would become a controlled economy.

Eisenhower believed that American political leadership had failed the republic. “Goddamit, is there no desire to know where we are going?,” he exclaimed. James Forrestal did not have “the stamina to equal his honesty and sense” and George Marshall, “the best public servant of the lot, obviously wants to quit.” “And poor HST, a fine man who, in the middle of a stormy lake, knows nothing of swimming,” Eisenhower mused, still, “drowning people are forced to look to him as a lifeguard.”³³ Truman and the Congress had overreacted, Eisenhower believed. Had the administration taken his advice, the $15 billion Eisenhower originally suggested would have covered the nation’s needs, without increasing the deficit, risking inflation, and undermining the American economy. “Such price increases, spiraling indefinitely upward out of anyone’s control,” Eisenhower wrote, “I am convinced can eventually wreck the nation’s security.”³⁴ He worried that a growing national budget, largely the result of increasing expenditures on military hardware, would result in an overall loss of national economic strength. In the end, Truman’s failed leadership and poor planning resulted in national budget of $56.9 billion for fiscal year 1952.

Eisenhower’s view of the American economy was basic but not simple-minded. From General Fox Conner, Eisenhower learned that democracies such as the United States needed to organize the whole of their industrial and economic base around warfare in order to win any major conflict. By 1935, according to one scholar, Eisenhower had become “one of the country’s leading experts on industrial mobilization.” As much as anything, this led to his various appointments before and during World War II, including roles in the office of the assistant secretary of war working for industrial mobilization plans. He worked closely with Bernard Baruch, Chairman of the War Industries Board, where he “became a firm convert to Baruch’s creed that victory in a future war would depend ultimately upon economic mobilization, a mobilization that would require the government to take control of the nation’s economy.”³⁵ In World War II, Eisenhower employed this conception of total war to insure the United States provided proper industrial mobilization to defeat fascism in Europe and the Pacific. All the nation’s resources needed proper management and coordination to supply the vast allied armies to defeat ruthless and fanatical enemies. Government had to play a crucial role in this effort.

Once the war ended, however, Eisenhower adopted a view of the American economy which could be characterized as classically liberal. This was not well expressed by Eisenhower as he rarely commented on economic matters not directly related to military procurement or budgets. Labor discord captured Eisenhower’s attention in the days after the war, and he did express his economic ideas within that context. In particular, he worried about possible government intervention in a potential strike of 1946. He insisted that strikes would not be a threat if the public understood the nature and danger of the communist threat. “We (our form of government) is [sic] under deadly, persistent, and constant attack,” he believed, “if this understanding were universal we’d have no strikes; capital and labor would easily solve their difficulties if both knew their very existence depended upon accord.” Though “all my sympathies are with the workers,” Eisenhower insisted all aspects of management and labor relations required study: “closed-shop, check-off, industry-wide unions, responsible, corporate organization of trade unions (one side). Effective antitrust laws, lockouts, control of raw materials, sound financing – private and government – limiting bureaucratic (other side).” Labor relations laws should be fair and just, Eisenhower believed, but “government should stay out of this field to the utmost extent.”³⁶ A classical liberal on government’s role, Eisenhower was also a fiscal conservative. According to William Shannon, “he believed in the absolute primacy of thrift, he wanted to return government functions to the states, he believed deficit financing was a sin, and he believed high taxes and government regulations” smothered free enterprise.³⁷

Still, Eisenhower worried about the growing number of government social programs some of which he saw as financially unhealthy and ethically unacceptable. Truman, for example, proposed to the 81st Congress a variety of social measures including federal health insurance, a farm plan, a fair employment practices law, a slum clearance law, and federal aid to education. Congressional Democrats did not possess the majorities to pass any of these pieces of legislation, save the Wagner-Ellender-Taft Housing Act which enjoyed bipartisan support in Congress.³⁸ Eisenhower was nonetheless appalled. “The trend toward governmental centralization continues – alarmingly,” Eisenhower noted. “In the name of ‘social security’ we are placing more and more responsibility upon the central govt,” he lamented, “and this means that an ever growing bureaucracy is taking an ever greater power over our daily lives.” “The ‘tax and tax – spend and spend – elect and elect’ formula is working wonderfully for the shortsighted persons who cannot (or do not desire to) see beyond the next election date,” Eisenhower wrote. This same scenario had already created a problem for Columbia. “Taxes leave prospective donors to university income so little in the way of spare income [sic] that only the most strenuous efforts keep us going at all,” he remarked. When money fell short, the rallying cry was always the same: federal aid to education. “It is a dangerous slogan,” he wrote. Even worse, Eisenhower continued, “the proposition is immoral, and its adoption, in this general sense, will lead to statism and, therefore, slavery.”³⁹ Eisenhower reserved this harshest of language for fiscal recklessness.

Things began to change for Eisenhower in October 1950 when Truman again summoned him to public duty and offered Eisenhower the top job at NATO, the Supreme Allied Commander for Europe. If NATO were to succeed, Truman reasoned, the alliance required unassailable leadership from someone committed to a European defensive alliance. Truman expected that Eisenhower would bring immediate credibility and promise to the fledgling organization. Eisenhower accepted and began working to build NATO, all the while staying abreast of American domestic politics. For months, prominent Republicans had urged him to run for president, and in early 1952, after slightly more than a year on the job at NATO, he declared himself a Republican and a presidential candidate.

Eisenhower continued to express frustration with Truman’s failure to plan appropriately, to allocate monies judiciously, and to build military strength efficiently. “I know that the men who have made the studies are capable, honest, and patriotic,” Eisenhower wrote on 22 January 1952, but “I am well acquainted with some of the countries in which the size of national budgets has stifled initiative and caused great difficulties otherwise.” That morning, Eisenhower read in the newspaper of Truman’s $85 billion budget request to Congress, including approximately $65 billion for national security and a $14 billion deficit. “There is newspaper speculation to the effect that these budgets will continue to rise,” Eisenhower noted. “If this is true (and I cannot believe for a moment that it is), then we are headed for worse than trouble. The effect will be disastrous,” he concluded.⁴⁰ By 1952, Eisenhower had concluded that Truman, the Congress, the military leadership, and the country had succumbed to growing Cold War hysteria and sought to spend themselves out of danger.

During times of war Eisenhower accepted fiscal policies for the short term which in the long term might do harm to the American economy. “Censorship, price controls, allocation of materials and commodities, and the like are necessary in a great war,” Eisenhower confided in his diary. He even accepted that in times of peace “certain of these controls could possibly be applied in unusual and serious circumstances.” In both these circumstances, the controls Eisenhower mentioned would be always temporary. Economic controls sustained over the long term to meet a continuing threat to national security, however, could do “serious damage to the system of government set up by our Constitution.” To strike a balance between national preparedness on one side and national bankruptcy on the other, the republic needed to anticipate and prepare for national defense priorities rather than to be surprised and reactive, according to Eisenhower. To meet the Cold War threat, Eisenhower believed, “we must devise and follow a system that we can carry on as long as there appears to be a threat in the world capable of endangering our national safety.”⁴¹

Defense preparation constituted one “horn of the dilemma” for Eisenhower. The republic required military power sufficient to meet challenges to its security and to that of the nation’s allies. As chief of staff, advisor to James Forrestal, and chairman of the Joint Chiefs of Staff, Eisenhower labored to stabilize the defense budget at $15 billion for several years into the future. According to Eisenhower, “the chiseling and cutting of estimates” by the Congress “was accompanied and made worse by a steadily depreciating value of the dollar.” “Thus, in the fiscal years 1947, 1948, 1949, and 1950, the defense fabric continued to shrink at an alarming extent,” he continued. The expenditures to allow the nation to wage the Korean War made these budget deficiencies apparent to everyone. Unprepared for the war militarily and fiscally, the nation had overreacted to the outbreak of war and began a military buildup which promised economic troubles down the line.

These economic troubles constituted the other side of the dilemma. “I am afraid that we are risking damage from the other horn of the dilemma,” Eisenhower worried, “that is, the danger of internal deterioration through the annual expenditures of unconscionable sums on a program of indefinite duration, extending far into the future.” Eisenhower got the impression that the $14 billion deficit for the following year would be the first of many. Expenditures beyond revenue at this level risked significant inflation. “The president told me very solemnly that an aggregate national budget of more than $42 billion would quickly spell unconscionable inflation,” Eisenhower remembered of Truman, “today we talk about $85 billion and apparently mean it to be indefinitely prolonged into the future.” “National bankruptcy would necessitate a type of control or confiscation of property,” he continued, “that would be in utter contradiction to the assurances and safeguards of our Constitution.”⁴² In short, Eisenhower believed that the result of those deficits might be national bankruptcy and the destruction of the republic.

For the republic to maintain national preparedness for the Cold War indefinitely into the future, the government required military and fiscal discipline to maintain proper economic strength. But, democracies had to undertake military preparation on a defensive basis only, Eisenhower insisted.⁴³ To insure military strength for defense the republic required careful planning and a conservative, disciplined approach to modernization and growth that provided not only proper force structure and size but also the flexibility to grow, adapt, and advance technologically. The building of economic strength required that the republic not overreact to military threats, maintain planned spending levels even in times of great danger, and build the most strength at the least cost over the long term.

In the midst of the Cold War, greater threats existed to the nation’s economy than to her military. “There is no greater probability of war today than there was two years ago; and no one can say for certain that there is any greater probability of deliberately provoked war at the end of this year or of next than there is now,” he argued in 1952. Despite the ongoing military effort on the Korean peninsula, Eisenhower was more concerned with Truman’s budget follies. Whereas the United States and the free world had met the communist challenge in Korea, the same could not be said of the nation’s economic response to the Korean War in particular and the Cold War in general. Eisenhower believed a cumulative loss of economic strength would upset the delicate balance and likely encourage more communist aggression. “We can say only that properly balanced strength will promote the probability of avoiding war,” he argued, “in this sense, we need the strength soon – but it must be balanced between moral power, economic power, and purely military power.”⁴⁴ Any significant reduction of strength in one of these areas risked a loss of cumulative strength that, according to conventional wisdom, encouraged aggression.

Comfortable with America’s military position in Korea despite the stalemate, he feared more the rise of the garrison state because of the effect that might have on the nation’s strategic position. He believed that lavish defense spending “will actually reduce rather than enhance our chances of preventing a war.” This will become reality, Eisenhower argued, “because we will have aroused genuine doubt, both among our own citizens and among our allies, as to the essential stability of the United States economy.”⁴⁵ For Eisenhower, a shaky economy led either to great skepticism about the United States’ ability to defend the free world against communism or to the belief that democracy and capitalism did have fatal flaws and was not capable of providing for the people of the industrial world. The implications of either of those alternatives proved too terrible to contemplate.

At the root of Eisenhower’s problem was the fact that defending lives and territory was only one part of his overall defense concept. Without maintaining fiscal discipline during war time, Eisenhower believed that huge expenditures would not serve the purpose of defending freedom, for that would be sacrificed in the land of the controlled economy.⁴⁶ Indeed, if defending only property were the central goal, this could be accomplished without much worry or greater risk. Spending could be unleashed, blast and fallout shelters could be built for a great portion of the nation at the government’s expense, and both a massive nuclear arsenal and a tremendous conventional force could be built. For Eisenhower, however, America’s freedoms and her way of life would be sacrificed in the spending spree. “These methods would almost certainly involve what is euphemistically called a controlled economy,” Eisenhower complained, “but which in effect would amount to a garrison state.”⁴⁷ From controlled economy to garrison state to dictatorial government, the United States would cease to be American and the cost of war would be the reason.

At one point, so disturbed and concerned about the economy of the national security state, Eisenhower wondered if, “in such circumstances, we would be forced to consider whether or not our duty to future generations did not require us to initiate war at the most propitious moment that we could designate.”⁴⁸ A preemptive nuclear strike would remove the hostile military threat, he reasoned, and eliminate the need for massive military expenditures which might otherwise endanger America’s free institutions. Though Eisenhower did not seriously contemplate the possibility of preemptive nuclear war, the economy of the national security state plagued him nonetheless. Following his inauguration as president, he did seek to find a better to way capitalize on what advantages the U.S. already had in an effort to advance all the goals of national security, including fiscal discipline and economic strength. Whereas Truman had not let American security lapse in the military sense, Eisenhower believed Truman’s fiscal failings did so in an economic sense.

Eisenhower now needed to decide just how to insure that military strength was not sacrificed for economic strength. Because of his experience with atomic weapons, he concluded that the proper use of atomic weapons might allow the nation to build both equally well. “It would be impossible for the United States to maintain the military commitments which it now sustains around the world (without turning into a garrison state),” Eisenhower wrote later, “did we not possess atomic weapons and the will to use them when necessary.”⁴⁹ Because Eisenhower saw both the fiscal and military value of the nuclear weapon he formulated the New Look.

c. Security without Bankruptcy

Regardless of Eisenhower’s belief in military strength through fiscal discipline, Truman’s increased defense budget allowed for the growth of both conventional and atomic armaments and a buildup of military strength. Total expenditures for national defense grew steadily from the post-war low of $16 billion in 1948 to $18 billion in 1950 and $25 billion in 1951. Total military personnel in the United States rose from 1.4 million troops in 1950 to a Korean War high of 3.6 million in 1952.⁵⁰ From the paltry beginning in 1945, America’s atomic stockpile totaled well over one-thousand weapons and seventy-two megatons of explosive power at the end of Truman’s second term.⁵¹ Continuing innovation in military technology, including the thermonuclear bomb and the Redstone missile, supported the growth of American military strength. His objections to the budget notwithstanding, this growth in military strength resulted in part from Eisenhower’s work between 1945 and 1953.

In the post-war period, Eisenhower was preoccupied with the political and fiscal aspects of military strategy rather than the technical elements of America’s newest and deadliest atomic weapons. Between 1942 and 1953, Eisenhower’s appeared to learn very little about atomic weapons beyond the obvious. During World War II, before Operation Overlord, he was briefed by senior War Department officials about the possibility the Germans might use radioactive materials on invading Allied troops. This information did not prompt the general to rethink the landings nor did he alter invasion plans to account for this new information. In fact, his briefing included little information in the way of protection against radiological attacks. For an army the size of the allied invasion force, no suitable protection could be offered, particularly considering that Eisenhower’s briefing came less than a month before the 6 June landings. War Department officials waited until the last possible minute to brief Eisenhower, as they likely understood that they could offer no comfort, little reassurance, and above all few specifics about the subject at hand. As chief of staff, as informal chairman of the Joint Chiefs of Staff, and as supreme allied commander of NATO, Eisenhower required little technical data on the nuclear weapon to do his job.