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.What is more, theeconomy was not growing fast enough to eliminate the persistentproblem of budget deficits.According to Frederick J.Lawton, Truman snew budget director, it was highly questionable that a balanced budget[could] be achieved in the foreseeable future. Lawton also assertedthat the economy is not growing in accordance with its full potential. Of course, critics of the Truman administration pointed out the follyof continued budget shortfalls.Conservative columnist Henry Hazlittlambasted Truman s January 1950 tax message to Congress, terming itsimply irresponsible. 2320. The Economic Situation at Midyear 1949, A Report to the President by theCouncil of Economic Advisers, Midyear Economic Report of the President (July 1949), 3.21.The Economic Report of the President, Together with a Report to the President: TheAnnual Economic Review by the Council of Economic Advisers, 1950 (January 6, 1950), 6.22.Leon Keyserling, A Look into the 1950s: Its Promises and Pitfalls, speech givento the Institute of Scrap Iron and Steel, Annual Convention, January 23, 1950, Papers ofLeon Keyserling, box 18, file: Speeches, 1950, HSTL; Economic Report of the President, 16.23.The subject of new inflationary pressures was raised several times during thenomination of Roy Blough to the Council of Economic Advisers in May 1950.See NSC-68 and the Korean War / 29The economy began to expand more rapidly in the second quarterof the year, and by June 18, doubts about the state of the economy hadbegun to disappear in the midst of what appeared to be a major boom.The economy, in fact, was nearing the finish of its most prosperous pe-riod since the end of the Second World War.In March, the economy hadbegun to gain momentum, and it continued unabated.Productivity andconsumer demand were up sharply.Unemployment stood at 5 percentand was heading downward.Sales of automobiles and televisions wereso frenzied that the food and clothing industries initiated a major cost-cutting campaign to lure consumers away from car and TV showrooms.But just as earlier concerns about the economy began to fade, new onessurfaced on Sunday, June 25, 1950, when reports of the North Koreaninvasion of South Korea hit the news wires.24Truman was first notified of the massive North Korean assault by agrim and shaken Dean Acheson late on the evening of June 24.Thenews stunned the president, but in characteristic fashion, he acteddecisively.Cutting short a long weekend in Missouri, Truman flewback to the capital on Sunday to confer with his top advisers.BySunday evening, less than twenty-four hours into the crisis, Trumanhad decided to intervene in the Korean War, sending U.S.troops intocombat for the first time since 1945.As a precaution, the president alsoordered the Seventh Fleet to the Straits of Formosa, and directed the AirForce to prepare plans for destroying all Soviet airfields in the Far East.Convinced that the surprise attack was Moscow-inspired or worse yet,a Soviet ruse to distract the West while it invaded Europe or attackedthe United States, the nation panicked.According to a Gallup poll takenduring the last week of June, 57 percent of Americans feared that WorldWar III had begun.Over the next several days, as Truman committedmore and more military assistance to the beleaguered South Koreans,Americans lauded his actions.His approval ratings soared, and thepopulace appeared to hunker down for what would be a long struggle.25The Korean crisis served Dean Acheson and the national securityoperatives very well.Here was proof of the Soviets evil intentions ofNomination of Roy Blough: Hearings before the Committee on Banking and Currency, UnitedStates Senate, 81st Cong., 2nd Sess., May 23, 1950.See also Bert G.Hickman, Growth andStability of the Postwar Economy, 76; Memo for the President, April 19, 1950, President sSecretary s Files (PSF)-Bureau of the Budget, box 151, HSTL.For Hazlitt s quotation seeNewsweek 34 (February 6, 1950): 12.24.John Edward Wiltz, The Korean War and American Society, in Francis H.Hellered., The Korean War: A 25-Year Perspective, 112.25.Ibid., 113 15; Donovan, Tumultuous Years, 189 99. 30 / Truman and Koreaworld domination.The economizers within the Truman administrationwere then completely discredited, and Truman reluctantly agreed to be-gin rearming the nation along the lines envisioned in NSC-68.Althoughit can be assumed that the president would have more than likelyauthorized some strengthening of American and European militarystrength had the Korean crisis not occurred, it is very doubtful that hewould have acceded to anything like the rearmament prescribed byNSC-68.He was simply too determined to balance the budget andcurb inflation.Korea changed all that.By September 1950, Trumanhad pushed the last of the economizers Secretary of Defense LouisJohnson out of his administration.He replaced Johnson with GeorgeMarshall.In the same month, he formally approved NSC-68.For thefirst time, the United States was prepared to match its military capacitywith its defense commitments, here and abroad.The immediate and enduring impact of the Korean War on theAmerican political economy was stunning.The president s decision tointervene provided a powerful stimulus to the economy.Income andemployment levels reached new heights, thus sustaining the economicrecovery well into 1953.On the negative side, the huge jump in defenseexpenditures from $13 billion in 1949 1950 to more than $52 billionby 1952 rekindled inflation and forced the Truman administration inJanuary 1951 to issue a mandatory wage-and-price freeze.The waralso led to increased taxes and acrimonious debates between conser-vatives and liberals over how best to redistribute America s economicand military resources.Finally, the imposition of far-flung governmentcontrols over the economy promoted an increase in bureaucratization,greater government intrusion into the affairs of private enterprise, andmost critically, brought to the fore fears of America as garrison state [ Pobierz całość w formacie PDF ]
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.What is more, theeconomy was not growing fast enough to eliminate the persistentproblem of budget deficits.According to Frederick J.Lawton, Truman snew budget director, it was highly questionable that a balanced budget[could] be achieved in the foreseeable future. Lawton also assertedthat the economy is not growing in accordance with its full potential. Of course, critics of the Truman administration pointed out the follyof continued budget shortfalls.Conservative columnist Henry Hazlittlambasted Truman s January 1950 tax message to Congress, terming itsimply irresponsible. 2320. The Economic Situation at Midyear 1949, A Report to the President by theCouncil of Economic Advisers, Midyear Economic Report of the President (July 1949), 3.21.The Economic Report of the President, Together with a Report to the President: TheAnnual Economic Review by the Council of Economic Advisers, 1950 (January 6, 1950), 6.22.Leon Keyserling, A Look into the 1950s: Its Promises and Pitfalls, speech givento the Institute of Scrap Iron and Steel, Annual Convention, January 23, 1950, Papers ofLeon Keyserling, box 18, file: Speeches, 1950, HSTL; Economic Report of the President, 16.23.The subject of new inflationary pressures was raised several times during thenomination of Roy Blough to the Council of Economic Advisers in May 1950.See NSC-68 and the Korean War / 29The economy began to expand more rapidly in the second quarterof the year, and by June 18, doubts about the state of the economy hadbegun to disappear in the midst of what appeared to be a major boom.The economy, in fact, was nearing the finish of its most prosperous pe-riod since the end of the Second World War.In March, the economy hadbegun to gain momentum, and it continued unabated.Productivity andconsumer demand were up sharply.Unemployment stood at 5 percentand was heading downward.Sales of automobiles and televisions wereso frenzied that the food and clothing industries initiated a major cost-cutting campaign to lure consumers away from car and TV showrooms.But just as earlier concerns about the economy began to fade, new onessurfaced on Sunday, June 25, 1950, when reports of the North Koreaninvasion of South Korea hit the news wires.24Truman was first notified of the massive North Korean assault by agrim and shaken Dean Acheson late on the evening of June 24.Thenews stunned the president, but in characteristic fashion, he acteddecisively.Cutting short a long weekend in Missouri, Truman flewback to the capital on Sunday to confer with his top advisers.BySunday evening, less than twenty-four hours into the crisis, Trumanhad decided to intervene in the Korean War, sending U.S.troops intocombat for the first time since 1945.As a precaution, the president alsoordered the Seventh Fleet to the Straits of Formosa, and directed the AirForce to prepare plans for destroying all Soviet airfields in the Far East.Convinced that the surprise attack was Moscow-inspired or worse yet,a Soviet ruse to distract the West while it invaded Europe or attackedthe United States, the nation panicked.According to a Gallup poll takenduring the last week of June, 57 percent of Americans feared that WorldWar III had begun.Over the next several days, as Truman committedmore and more military assistance to the beleaguered South Koreans,Americans lauded his actions.His approval ratings soared, and thepopulace appeared to hunker down for what would be a long struggle.25The Korean crisis served Dean Acheson and the national securityoperatives very well.Here was proof of the Soviets evil intentions ofNomination of Roy Blough: Hearings before the Committee on Banking and Currency, UnitedStates Senate, 81st Cong., 2nd Sess., May 23, 1950.See also Bert G.Hickman, Growth andStability of the Postwar Economy, 76; Memo for the President, April 19, 1950, President sSecretary s Files (PSF)-Bureau of the Budget, box 151, HSTL.For Hazlitt s quotation seeNewsweek 34 (February 6, 1950): 12.24.John Edward Wiltz, The Korean War and American Society, in Francis H.Hellered., The Korean War: A 25-Year Perspective, 112.25.Ibid., 113 15; Donovan, Tumultuous Years, 189 99. 30 / Truman and Koreaworld domination.The economizers within the Truman administrationwere then completely discredited, and Truman reluctantly agreed to be-gin rearming the nation along the lines envisioned in NSC-68.Althoughit can be assumed that the president would have more than likelyauthorized some strengthening of American and European militarystrength had the Korean crisis not occurred, it is very doubtful that hewould have acceded to anything like the rearmament prescribed byNSC-68.He was simply too determined to balance the budget andcurb inflation.Korea changed all that.By September 1950, Trumanhad pushed the last of the economizers Secretary of Defense LouisJohnson out of his administration.He replaced Johnson with GeorgeMarshall.In the same month, he formally approved NSC-68.For thefirst time, the United States was prepared to match its military capacitywith its defense commitments, here and abroad.The immediate and enduring impact of the Korean War on theAmerican political economy was stunning.The president s decision tointervene provided a powerful stimulus to the economy.Income andemployment levels reached new heights, thus sustaining the economicrecovery well into 1953.On the negative side, the huge jump in defenseexpenditures from $13 billion in 1949 1950 to more than $52 billionby 1952 rekindled inflation and forced the Truman administration inJanuary 1951 to issue a mandatory wage-and-price freeze.The waralso led to increased taxes and acrimonious debates between conser-vatives and liberals over how best to redistribute America s economicand military resources.Finally, the imposition of far-flung governmentcontrols over the economy promoted an increase in bureaucratization,greater government intrusion into the affairs of private enterprise, andmost critically, brought to the fore fears of America as garrison state [ Pobierz całość w formacie PDF ]