Sovereign Soldiers AMERICAN BUSINESS, POLITICS, AND SOCIETY Series editors: Andrew Wender Cohen, Pamela Walker Laird, Mark H Rose, and Elizabeth Tandy Shermer Books in the series American Business, Politics, and Society explore the relationships over time between governmental institutions and the creation and performance of markets, firms, and industries, large and small The central theme of this series is that politics, law, and public policy—understood broadly to embrace not only lawmaking, but also the structuring presence of governmental institutions—has been fundamental to the evolution of American business from the colonial era to the present The series aims to explore, in particular, developments that have enduring consequences A complete list of books in the series is available from the publisher Sovereign Soldiers How the U.S Military Transformed the Global Economy After World War II Grant Madsen universit y of pennsylvania press phil adelphia Copyright ᭧ 2018 University of Pennsylvania Press All rights reserved Except for brief quotations used for purposes of review or scholarly citation, none of this book may be reproduced in any form by any means without written permission from the publisher Published by University of Pennsylvania Press Philadelphia, Pennsylvania 19104-4112 www.upenn.edu/pennpress Printed in the United States of America on acid-free paper 10 Library of Congress Cataloging-in-Publication Data Names: Madsen, Grant, author Title: Sovereign soldiers: how the U.S military transformed the global economy after World War II / Grant Madsen Other titles: American business, politics, and society Description: 1st edition ͉ Philadelphia: University of Pennsylvania Press, [2018] ͉ Series: American business, politics, and society ͉ Includes bibliographical references and index Identifiers: LCCN 2017060415 ͉ ISBN 9780812250367 (hardcover: alk paper) Subjects: LCSH: United States—Economic policy—1945–1960 ͉ Economic history—1945–1971 ͉ United States—Armed Forces—Stability operations ͉ Reconstruction (1939–1951)—Japan ͉ Reconstruction (1939–1951)—Germany ͉ United States—Foreign economic relations—History—20th century Classification: LCC HC106.5 M354 2018 ͉ DDC 330.943/0875—dc23 LC record available at https://lccn.loc.gov/2017060415 To Carol and Gordon, My models for being a historian, scholar, and so much more This page intentionally left blank Contents List of Abbreviations ix Introduction Chapter When the Military Became an External State 10 Chapter The War, the Economy, and the Army 25 Chapter The Army in a Time of Depression 44 Chapter The Army, the New Deal, and the Planning for the Postwar 61 Chapter “This Thing Was Assembled by Economic Idiots” 75 Chapter The Army Creates a Plan for Germany 93 Chapter A German “Miracle” 110 Chapter Political Progress in Japan—and Economic Decline 123 Chapter “Recovery Without Fiction” 145 Chapter 10 Implementing the “Dodge Line” 162 Chapter 11 Truman and Eisenhower 183 Chapter 12 “The Great Equation” 209 viii Contents Chapter 13 Protecting the Global Economy 235 Epilogue 258 Notes 263 Index 321 Acknowledgments 327 Abbreviations DDEPL HSTPL NA JDP OJMS HSP GML FRUS PDDE APP Dwight D Eisenhower Presidential Library, Abilene, KS Harry S Truman Presidential Library, Independence, MO National Archives, College Park, MD Joseph M Dodge Papers, Detroit Public Library, Detroit, MI Occupation of Japan Microfiche Series, Suitland, MD; Congressional Information Service, Washington National Records Center, Bethesda, MD Henry Stimson Papers, Yale University Library, Microfilm Collection, New Haven, CT George C Marshall Research Library, Lexington, VA Foreign Relations of the United States, Government Printing Office, Washington, DC Papers of Dwight D Eisenhower, Johns Hopkins University Press, Baltimore, MD, 1970 The American Presidency Project, by Gerhard Peters and John T Woolley, http://www.presidency.ucsb.edu/index.php 314 Notes to Pages 227–232 66 “Excerpts From Editorials Commenting on Elections,” NYT, November 5, 1954: 12 67 “To Milton Stover Eisenhower (November 6, 1953),” PDDE, 14 68 “Memorandum of Discussion at the 138th Meeting of the National Security Council (March 25, 1953),” FRUS 1952–1954: vol 2: National Security Affairs (in two parts), 1:261 69 Pearson, “Defense or Economy: Up to Ike,” Washington Post, September 23, 1953: 43 70 John G Norris, “Wilson Sees Defense Cuts Near Limit,” Washington Post, September 30, 1953: 71 Fiscal Year 1955 Department of Defense Budget, September 30, 1953, Box: 12, Joseph Dodge, 1952–53, Folder: 2, Administrative Series, Presidential Papers of Dwight D Eisenhower, DDEPL 72 “Memorandum of Discussion at the 166th Meeting of the National Security Council, Tuesday, October 13, 1953,” FRUS, 1952–1954: vol 2: National Security Affairs (in two parts), 1:544 73.Text of Dulles’ Statement on Foreign Policy of Eisenhower Administration,” NYT, January 13, 1954: 74 J A Livingston, “Too Much Anti-Inflation Pressure?” Washington Post, May 10, 1953: C16 75 “Text of Truman Speech in Manchester,” NYT, October 17, 1952: 22 76 W H Lawrence, “Stevenson Warns ‘4 Fears’ Under G.O.P Replace Freedoms,” NYT, December 13, 1953: 77 “Appraisal of Current Trends In Business and Finance,” WSJ, January 25, 1954: 78 “Text of Truman Speech on Economic Problems Facing the Nation and Administration,” NYT, May 14, 1954: 14 79 Dwight D Eisenhower, Mandate for Change, 1953–1956: The White House Years (Garden City, NY: Doubleday and Company, 1963) 307 80 Ibid., 304–307 81 “348: To Benjamin Franklin Caffey, Jr., July 27, 1953,” PDDE, 14:429 82 Dwight D Eisenhower, “Annual Message Transmitting the Economic Report to the Congress,” January 28, 1954, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬9997 83 Selma Mushkin, “The Internal Revenue Code of 1954 and Health Programs,” Public Health Reports 70, no (August 1955): 791 84 “In 1952, on the eve of the changes in tax policy that codified the tax subsidy, 63 percent of households had health insurance coverage In 1957, three years after the implementation of the tax subsidy, nearly 76 percent of American households had health insurance by lowering the after-tax price of health insurance, the change in tax policy led workers to purchase more group health insurance coverage from their employers and encouraged the expansion of employment-based, group health insurance in the United States In addition, households who already had group insurance, as well as households with high marginal tax rates purchased policies with more generous coverage after the implementation of the tax subsidy Thus, the tax subsidy increased the amount of health insurance demanded, and extended access to health care By fostering an increase in the demand for group insurance relative to individual coverage, it also ensured that health insurance in the United States would evolve as a group, employment-based system.” Melissa A Thomasson, “The Importance of Group Coverage: How Tax Policy Shaped U.S Health Insurance,” American Economic Review 93, no (November 2003): 1373–1374 Notes to Pages 232–239 315 85 Burton Crane, “U.S Stockholders Top 10 Million,” NYT, July 24, 1956: 33, 37 86 “Annual Budget Message to the Congress: Fiscal Year 1955,” PDDE, doc 14, 90–100 87 House Report on the Internal Revenue Act of 1954: Minority Views, US Code, Congressional and Administrative News, vol 3, 83rd Cong., 2nd sess (Washington, DC: United States Government Printing Office, 1954) 4601 88 M Packman, “Shares in Tax Relief,” 1954 Editorial Research Reports, vol 1, Washington, DC: Congressional Quarterly Press, http://library.cqpress.com/cqresearcher/cqresrre 1954031600 89 Ibid 90 Joint Economic Committee, Economic Report of the President Hearings Before the Joint Committee on the Economic Report (Washington, DC: Government Printing Office, 1954) 80, 102–104 Chapter 13 Mark H Rose and Raymond A Mohl, Interstate: Highway Politics Since 1939, 3rd ed (Knoxville: University of Tennessee Press, 2012) Interview with Dr Gabriel Hauge by Ed Edwin, May 31, 1967, Oral History Research Office, Columbia University, New York City, 77 Leo Egan, “Governors Oppose U.S Aid for Modernizing Highways,” NYT, July 14, 1954: Eisenhower, Mandate for Change, 548 Interview with General Lucius D Clay by Ed Edwin, February 20, 1967, New York, Box: 18, Articles, Interviews and Statements 1950–1977, Folder: Oral History Project on Eisenhower Administration, Lucius Clay Collection, GML, 101 Ibid Rose and Mohl, Interstate, 74 “Letter to Sherman Adams from Joseph M Dodge,” January 18, 1954, Box: 13, Folder: 7, Resignations, Bureau of the Budget, JPD “65—Letter Accepting Resignation of Joseph M Dodge as Director of the Bureau of the Budget, March 27, 1954,” APP, http://www.presidency.ucsb.edu/ws/index.php?pid‫ס‬ 10193&st‫ס‬dodge&st1 10 Actually, April 15 did not become “Tax Day” until the following year as a result of the 1954 Internal Revenue Act 11 John Harriman, “The Budget-Cutter Leaves: Dodge, Ike’s Most Feared Aid, Quits Job,” Boston Globe, April 11, 1954: C68 12 Rose and Mohl, Interstate, 74–75 13 Interview with General Lucius D Clay by Ed Edwin, GML, 102–103 14 “Manion Raps Ike’s ‘Rush to Social State’: Charges Shift from His Earlier Beliefs,” Chicago Tribune, March 7, 1955: C6 15 U.S Congress, Senate Committee on Public Works, National Highway Program, 84th Cong., 1st sess (Washington, DC: Government Printing Office, 1955) 121 16 Ibid., 497 17 Hon Joseph Campbell, “Is The President’s New Highway Program Sound? CON,” Congressional Digest, vol 34, May 1955: 151 316 Notes to Pages 239–243 18 Mark H Rose, Interstate: Express Highway Politics, 1939–1989 (Knoxville: University of Tennessee Press, 1990) 81 19 Interview with Dwight D Eisenhower by Ed Edwin, July 20, 1967, DDEPL, 100–101 20 Dennis W Johnson, The Laws That Shaped America: Fifteen Acts of Congress and Their Lasting Impact (New York: Routledge, 2009) 278 21 Tom Lewis, Divided Highways: Building the Interstate Highways, Transforming American Life (Ithaca, NY: Cornell University Press, 2013) 117 22 Eisenhower, Mandate for Change, 548 23 Eisenhower, “Special Message to the Congress Transmitting Proposed Changes in the Social Security Program.,” August 1, 1953, APP, http://www.presidency.ucsb.edu/ws/ ?pid‫ס‬9662 24 Dwight D Eisenhower, Middle Way Speech, Boise, ID, August 20, 1952, Box: 1, Folder: July 12, 1952 to Sept 14, 1952, Ann Whitman File, Speech Series, DDEPL 25 “Judge the GOP by Its Voting, Sparkman Asks,” Chicago Tribune, August 14, 1952: 11 26 See, in particular, Andrew Morris, “Eisenhower and Social Welfare,” in A Companion to Dwight D Eisenhower, ed Chester J Pach (Malden, MA: Wiley-Blackwell, 2017) 255 27 “946: To Richard Milhous Nixon, Personal and Confidential,” PDDE, 13:1366–1369 28 Interview with Dwight D Eisenhower by Ed Edwin, July 20, 1967, DDEPL, 101–102 29 Dwight D Eisenhower, Radio and Television Address to the American People on the Administration’s Purposes and Accomplishments, January 4, 1954, APP, http://www.presi dency.ucsb.edu/ws/?pid‫ס‬9985 30 Eisenhower, “Special Message to the Congress on Old Age and Survivors Insurance and on Federal Grants-in-Aid for Public Assistance Programs,” January 14, 1954, APP, http:// www.presidency.ucsb.edu/ws/?pid‫ס‬9874 31 Wilbur J Cohen, Robert M Ball, and Robert J Myers, “Social Security Act Amendments of 1954: A Summary and Legislative History,” Social Security Bulletin, September 1954: 16 32 Congressional Record—Senate, August 13, 1954: 14381–14382 33 U.S Congress, House Committee on Ways and Means, Report to Accompany H.R 9366: Social Security Amendments of 1954, House Report No 1698, 83rd Cong., 1st sess., May 28 (Washington, DC: Government Printing Office, 1954), 26 34 Wilbur J Cohen, Robert M Ball, and Robert J Myers, “Social Security Act Amendments of 1954: A Summary and Legislative History,” Social Security Bulletin, September 1954, 13 35 Congressional Record—Senate, August 13: 14416 36 “More Social Security,” NYT, September 4, 1954: 10 37 William Leuchtenburg, In the Shadow of FDR: From Harry Truman to George W Bush (Ithaca, NY: Cornell University Press, 2001) 48–49; see also Jason Scott Smith, Building New Deal Liberalism: The Political Economy of Public Works, 1933–1956 (New York: Cambridge University Press, 2009); John W Sloan, Eisenhower and the Management of Prosperity (Lawrence: Kansas University Press, 1991); Gerard H Clarfield, Security with Solvency: Dwight D Eisenhower and the Shaping of the American Military Establishment (Westport, CT: Greenwood Publishing Group, 1999) 11; Parmet, Eisenhower and the American Crusades, 10 See Notes to Pages 244–251 317 also Wicker, Dwight D Eisenhower, 3; Ambrose, Eisenhower: Soldier and President, 575; Geoffrey Perret, Eisenhower (New York: Random House, 1999) 507; and Steven Wagner, Eisenhower Republicanism: Pursuing the Middle Way (DeKalb, IL: Northern Illinois University Press, 2006) 38 Ludwig Erhard, “Prosperity for All, (1957)” in The Economics of Success, 194 39 Chiyoda-ku Hirakawa-cho, The Constitution of the Liberal Democratic Party and Its Declaration, Basic Principles, Characteristics, Mission Platform (Tokyo: The Liberal Democratic Party, 1964) 2–7 40 “1408: To George Magoffin Humphrey, April 26, 1955,” PDDE, 16:1686–1687 41 Dwight D Eisenhower, “288—The President’s News Conference,” December 2, 1959, APP, http://www.presidency.ucsb.edu/ws/index.php?pid‫ס‬11587&st‫ס‬banker&st1‫ס‬ 42 Eisenhower, “Remarks at Meeting of the World Bank and the International Monetary Fund,” September 28, 1956, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬10614 43 Michael D Bordo, “The Bretton Woods International Monetary System: An Historical Overview,” National Bureau of Economic Research Working Paper 4033 (Cambridge, MA: NBER, 1992), see Table in Bordo’s article 44 Iwan W Morgan, Eisenhower versus “The Spenders”: The Eisenhower Administration, the Democrats and the Budget, 1953–60 (London: Pinter Publishers, 1990) 129 45 Christopher A Preble, “ ‘Who Ever Believed in the “Missile Gap”?’ John F Kennedy and the Politics of National Security,” Presidential Studies Quarterly 33, no (December 2003): 801–826 46 “Missile ‘Penny-Pinching’ Denounced by Kennedy,” Atlanta Constitution, November 7, 1957: 18 47 George Bookman Papers, Box: 1, Folder: “Chapter 12,” DDEPL, 21 48 Eisenhower, “70—The President’s News Conference, April 9, 1958,” APP, http:// www.presidency.ucsb.edu/ws/index.php?pid‫ס‬11346&st‫ס‬inflation&st1‫ס‬ 49 “Democrats Sweep 1958 Elections; Will Have 64 Senators, 283 Representatives, 35 Governors,” in Congressional Quarterly Almanac 1958, 14th ed (Washington, DC: Congressional Quarterly, 1959), 11:713–716, http://library.cqpress.com/cqalmanac/cqal58-1340275 50 Eisenhower, “The President’s News Conference,” November 5, 1958, APP, http:// www.presidency.ucsb.edu/ws/?pid‫ס‬11286 51 Ibid 52 Dwight D Eisenhower, Waging Peace (Garden City, NY: Doubleday and Co., 1965) 379 53 Notes of Cabinet Meeting, June 5, 1959, Box: 14, Folder: Cabinet Meeting of June 5, 1959, Cabinet Series, DDEPL 54 “Fancy Juggling,” WSJ, October 6, 1958: 12 55 Eisenhower, Waging Peace, 385 56 Ibid., 387; also ibid., Appendix U 57 Cabinet Minutes, March 13, 1959, Box: 13, Folder: Cabinet Meeting of March 13, 1959, Cabinet Series, DDEPL, 2–3 58 William M McClenahan, Jr., and William H Becker, Eisenhower and the Cold War Economy (Baltimore: Johns Hopkins University Press, 2011) 100 59 Walter Lippmann, “Money Markets Lack Confidence in President’s War on Inflation,” Los Angeles Times, May 17, 1959: B5 318 Notes to Pages 251–255 60 Joint Economic Committee, January 1959 Economic Report of the President (27 January 1959) (Washington, DC: Government Printing Office, 1959) 204–205, 209 See also McClenahan and Becker, Eisenhower and the Cold War Economy, 108 61 A W Phillips “The Relationship Between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861–1957,” Economica 25, no 100 (1958): 283–299 62 Paul A Samuelson and Robert M Solow, “Analytical Aspects of Anti-Inflation Policy,” American Economic Review 50, no (May 1960): 185, 192 63 “Man of the Year,” Time 75, no (January 4, 1960): 11 64 Joseph Alsop, “The LBJ Congress,” Hartford Courant, July 8, 1959: 14 65 Interview with Robert B Anderson by Herbert Parmet, March 11, 1970, DDEPL, 19–20 66 Richard E Mooney, “Nixon Committee Asks U.S to Bar Inflation,” NYT, June 28, 1959: See also Gellman, The President and the Apprentice, 451–460 67 “Prosperous 60s Seen by Nixon Panel: Rising Living Level Predicted with End to Price Increases Nixon Panel Predicts Rising Living Levels,” Los Angeles Times, April 17, 1960: 68 Democratic Party Platforms, “1960 Democratic Party Platform,” July 11, 1960, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬29602 See also Collins, More, 49–50 69 When adjusted for inflation and population See C I Jones, “The Facts of Economic Growth,” in Handbook of Macroeconomics, ed John B Taylor and Harald Uhlig (Amsterdam: Elsevier, B.V., 2016) 2:5 70 Eisenhower, “Annual Message Presenting the Economic Report to the Congress,” January 20, 1960, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬11806 71 Eisenhower, “Telegrams to Vice President Nixon and Henry Cabot Lodge,” November 9, 1960, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬12014 72 Herbert Stein, Presidential Economics: The Making of Economic Policy from Roosevelt to Clinton (Washington, DC: American Enterprise Institute for Public Policy Research, 1994) 157 73 “Directive by the President Concerning Steps to Be Taken with Respect to the United States Balance of Payments (The 1960 Supplement to Title of the Code of Federal Regulations),” Federal Register 25:12221 74 Eisenhower, “The President’s News Conference at Augusta, Georgia,” November 16, 1960, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬12020 75 “To Milton Stover Eisenhower, May 25, 1959,” PDDE, 20:1492–1493 76 There are, of course, varying interpretations of Eisenhower’s meaning For a good overview, see James Ledbetter, Unwarranted Influence: Dwight D Eisenhower and the MilitaryIndustrial Complex (New Haven, CT: Yale University Press, 2011) chap and My own interpretation is similar to Martin J Medhurst’s in emphasizing the notion of balance over the criticism of the military-industrial complex See Martin J Medhurst, “Reconceptualizing Rhetorical History: Eisenhower’s Farewell Address,” Quarterly Journal of Speech 80, no (May 1994): 295–316 For a critical take on Medhurst, see Robert L Scott, “Eisenhower’s Farewell Address: Response to Medhurst,” Quarterly Journal of Speech 81, no (November 1995): 496–501 77 David Greenberg, “Beware the Military-Industrial Complex: Eisenhower’s Farewell Address Has Been Completely Misunderstood,” Slate, January 14, 2011, http://www slate.com/articles/news_and_politics/history_lesson/2011/01/beware_the_militaryindustrial Notes to Pages 256–261 319 _complex.html; see also Will Inboden, “Looking Back on Ike’s Farewell Address,” Foreign Policy, December 17, 2010, http://foreignpolicy.com/2010/12/17/looking-back-on-ikes-fare well-address/ 78 Eisenhower, “Farewell Radio and Television Address to the American People,” January 17, 1961, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬12086 79 Leonard S Silk, “Nixon’s Program —‘I Am Now a Keynesian,’ ” NYT, January 10, 1971: E1 80 Richard Nixon, “Address to the Nation Outlining a New Economic Policy: ‘The Challenge of Peace,’ ” August 15, 1971, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬3115 Epilogue “892: To Bernard Edwin Hutchinson, July 10, 1950,” PDDE, 11:1217–1218 Summary of Notes of Interview with General Douglas MacArthur by Forrest C Pogue, January 3, 1961, New York, GML “Commander of Armies That Turned Back Japan Led a Brigade in World War I,” NYT April 6, 1964: 26 Arthur A Kimball, Memorandum for Mr Arthur Minnich, November 1954, Box: 3, Folder: ACW Diary November 1954, Ann Whitman File, Ann Whitman Diary Series, DDEPL “Eisenhower Mourns Death of J M Dodge,” NYT, December 4, 1964: 39, “Plan to Double Individual Income, December 27, 1960,” in Japan: A Documentary History, ed David J Lu, vol 2, The Late Tokugawa Period to the Present (Armonk, NY: East Gate, 1997) 527–530 “The Honorable Joseph M Dodge,” Box: 1, Folder: 2, Biography, JDP Nakamura Takafusa, “Ikeda Hayato: The Man Who Created the ‘Economic Era,’ ” in The Prime Ministers of Postwar Japan, 1945–1995: Their Lives and Times, ed Akio Watanabe (Lanham, MD: Lexington Books, 2016) “Obituaries: Ludwig Erhard Guided W Germany’s Recovery,” Boston Globe, May 5, 1977: 39 10 John F Kennedy, “Remarks in the Rudolph Wilde Platz, Berlin,” June 26, 1963, APP, http://www.presidency.ucsb.edu/ws/?pid‫ס‬9307 11 Bordo, “The Bretton Woods International Monetary System,” 1–2 12 See, generally, Walter W Heller, “The Future of Our Fiscal System,” Journal of Business 38, no (July 1965): 235–244 13 J Bradford De Long, “America’s Only Peacetime Inflation: The 1970s,” National Bureau of Economic Research, Historical Working Paper 84 (Cambridge, MA: NBER, 1996) This page intentionally left blank Index Acheson, Dean, 65, 173, 201, 290, 292 Adams, Sherman, 220, 236, 265, 315 Aguinaldo, Emilio, 14 Ainsworth, Frederick Crayton, 20–21 Allied Control Council (ACC), 78, 113 allied war debts (World War I), 27–29, 48–50 y A´lvarez, Fermı´n Ja´udines, 12 American Political Development, 6–7, 265– 67, 269, 323 Anderson, Robert B ‘‘Bob,’’ 198–99, 247–48, 250–52, 266, 309, 318, 324 Anthony, Daniel Read, 33 antitrust, 21, 186, 264, 293, 296 Arisawa, Hiromi, 134–35, 156, 295, 300 Arisawa-Kimura Debate, 156 army: and New Deal, 51–53; professionalization of, 10–11, 17–18, 20–25, 27, 29–33, 35–37 Ashida, Histoshi, 148 Atcheson, George, 133–34, 294 Atlantic Charter, 63 Austrian School of Economics, 100, 145 banking, 31, 48–49, 52, 73, 77, 83, 89–90, 92, 94–95, 98–9, 119, 126, 149, 152, 159, 196, 200, 276, 281–82, 287, 295, 299–300, 309 Baruch, Bernard, 31, 41–43, 52, 214, 273, 275, 312 Barzynski, Eunice, 203 Bernstein, Bernard, 84–86, 88–91, 101, 130, 282, 284, 287, 305 Beveridge, Lord William, 188–89, 307 Bevin, Ernest, 114–15 Bismarck, Otto von, 59 bizone, 108, 115–16, 120 bizonia See bizone Boeki Cho (Board of Trade), 159 Boettiger, John, 183 bond market See government bonds Bordo, Michael D., 260, 317, 319 Bradley, Omar, 19, 201–2, 223, 304, 311 Breckinridge, Henry, 22 Bretton Woods agreements, 4–5, 68, 70, 73, 103, 110, 245–47, 250–51, 254, 256, 260–61 Brookings Institute, 234 Brown, Lewis H., 191–92, 267, 270, 307–8 Brownell, Herbert, 215–16, 312 Bureau of the Budget, 101, 216, 227, 237, 250, 312 Byrd, Harry F., 238–39 Byrnes, James F., 72, 74, 86, 122, 283 Cartels, 51, 70, 82, 84, 90–92, 126, 280, 283, 285 Chamberlain, Neville, 49 Chicago Tribune, 143, 185, 201 China: communist revolution, 141; entry into Korean War, 175–78, 197 Christian Science Monitor, 177 Churchill, Winston, 1, 63–64, 81, 86, 142 civilian government, in occupied areas, 14– 15, 76, 204 Clark, Colin, 230, 307 Clausewitz, Carl von, 38, 59, 278 Clay, Alexander S., 18 Clay, Lucius D.: Clay Commission, 236, 238–40; in Germany, 72–77, 79–94, 98– 99, 101–5, 108–5, 117–22; in Panama, 36–39; in Philippines, 56–61 Clayton-Bulwer Treaty, 37 Colm, Gerhard, 98, 101–5, 108, 113, 116, 135, 286–89, 309 Colm-Dodge-Goldsmith Plan (CDG plan), 104–7, 113–14, 116–17, 289 Committee for Economic Development, 221 322 Index Conner, Fox, 38–41, 58, 275, 278 Coolidge, Calvin, 39 Council of Economic Advisors (CEA), 105, 108, 187, 189, 193–94, 230, 251, 306–7 Council on Foreign Relations, 64 Counterpart Fund, 159, 163, 172, 301 currency conversion, 104–7, 113–21, 141, 203, 268, 292, 301 Dale, Edwin L., 248 Depression, vii, 2, 4, 25, 27, 44–45, 47–51, 55, 62–65, 67–68, 88, 90, 94–95, 124, 152, 230, 233, 243 Dewey, George, 11, 16 Dewey, Thomas E., 128, 204, 208, 215–16 DiSalle, Michael, 220–2 Dodge, Joseph M.: budget director, 216–20, 222–23, 225–28; German economy, 97– 108; in Japan, 145–81; and Marshall Plan, 110–13 Dodge Line, 161, 166–67, 169, 171, 179 Douglas, Lewis, 82–83, 86, 88–89, 114 Douglas, Paul, 222, 233–35 Dow Jones Industrial Average, 47, 232 Draper, William H., Jr., 3, 83–84, 86, 88–89, 93–94, 105–7, 121, 130, 138–42, 145–48, 151, 153–54, 203–7, 216–17, 252, 256, 284–86, 289, 292, 295–300, 308, 310–12 Dublin, Mary, 194 Dulles, John Foster, 216, 218, 228–29 Dyke, Ken R., 131 Eccles, Marriner S., 196, 199, 203, 309 The Economist, 26, 80, 166, 204 Edwards, Corwin, 126, 293 Eisenhower, Dwight D.: campaign of ‘52, 208–20; Farewell Address, 254, 256; in Germany, 75–82, 85–87; NATO Supreme Commander, 197–207; and New Deal 51– 52, 4; in Panama, 37–39; in Philippines, 54–61; presidency, 220–61; at West Point, 10, 18–19; and World War I, 29, 32–34 Elsey, George, 69, 280 Engel, Albert J., 93 Erhard, Ludwig, 3, 102, 115–20, 221, 244, 249, 259–60, 291–92, 317, 319 external state, vii, 7–11, 13, 15, 17, 19, 21, 23, 25, 35, 37–38, 43, 76, 202, 261, 267 Fallon, George H., 239–40 Federal Reserve, 31, 47–48, 66–67, 99, 101, 140, 196–200, 230, 250, 260, 309 Fed-Treasury Accord (story of), 196–200 Fillmore, Millard, 123, 292 Flation, 189, 307 Galbraith, John Kenneth, 108, 288–89 Geronimo, 129 Goldsmith, Raymond W., 98, 101–5, 108, 113, 116, 135, 286–88, 292 Government Aid and Relief in Occupied Areas (GARIOA), 133–34, 140 government bonds, 31, 43, 45, 88, 95, 97, 181, 152–53, 196, 199–200, 236–39, 245–46 Grant, Ulysses S., 19 growthmanship, 193, 195, 308 Gruenther, Alfred Maximilian, 199 Hamilton, Alexander, 232 Hansen, Alvin, 186–87, 192–93 Harding, Warren G., 37, 266 Harriman, W Averell, 201, 205, 310, 315 Hauge, Gabriel, 235, 315 Hay, John, 17, 270 Hay—Bunau-Varilla Treaty, 38 Heller, Walter, 251, 319 Hillman, Sidney, 185 Hirohito (Emperor Sho¯wa), 36, 125, 277 Hitler, Adolf, 49, 64, 70, 83, 91, 95, 101, 241, 281 Hoffman, Paul G., 140 Hoover, Herbert, 1, 40–41, 47, 49–51, 133, 294 Hopkins, Harry, ix, 53, 70, 72, 263, 273, 275, 317 House, E M., 28 Hull, Cordell, 62–65, 76, 279 Humphrey, George M., 216, 218, 221–26, 228, 233–34, 245–47, 252, 317 Ickes, Harold, 54 Ikeda, Hayato, 3, 154–57, 162–63, 165–66, 168, 170–72, 174, 181, 259, 298, 301–4, 319 inflation: in Germany, 69, 83, 89, 95, 97, 99– 101, 105–6, 107, 110, 112, 114, 118–21; in Japan, 134–37, 145, 148–49, 153–57, 165, 168–69, 171–72, 174, 180–82; in U.S., 41, 43, 185, 187–94, 196, 199–200, 205–8, 213–14, 220–22, 234, 241, 247, 249, 251– 52, 256, 260–1 Index Insular Cases, 7, 16, 266, 270 Internal Revenue Act of 1954, 231–32, 243, 314–15 International Monetary Fund (IMF), 68, 246–47, 259, 264, 280, 317 Interstate Highway Act, 235–40, 243 Ishibashi, Tanzan, 135–37, 153, 155, 165, 256, 295, 300 Jiji Shimpo, 165 Jodl, Alfred, 75 Johnson, Hugh Samuel, 54 Joint Chiefs of Staff, 82, 146, 178, 201–2, 228 Jones Act, 16 Kai-shek, Chiang, 177, 305 Kennan, George F., 141–42, 173, 296–97 Kennedy, John F., 247, 251, 253–55, 260 Keynes, John Maynard, 44, 61–62, 65, 67–69, 121, 135, 153, 186–88, 192, 233, 264–65, 272, 278–80, 300, 306–7 Keynesian Economics, 5, 61–62, 68, 95, 121, 135, 152, 153, 155, 171, 182, 184, 186, 190, 192–93, 213, 233, 235, 243, 247, 251–52, 256, 260, 264–65, 278–80, 306, 319 Keynesians, 186–87, 193, 213 Keyserling, Leon, 155, 193–95, 225, 233, 251, 253, 256, 308 Kimura, Kihachiro, 155–56, 300 Kindleberger, Charles P., 94, 109, 286–87, 289 Knapp, J Burke, 87, 279, 284 Knox, Frank, 60, 278 Korean War, 173, 179, 195–97, 205, 211–12, 214, 217, 219, 223, 229, 303–5 Krock, Arthur, 144, 184–85, 191, 297, 306–7 Latham, Robert, 7, 267 LeCount, Walter, 167 Lee, Robert E., 19 Lehman, Herbert Henry, 242 Lewis, Fulton, Jr., 191 Lippmann, Walter, 50, 63, 122, 202, 251, 276, 292, 310, 317 Lodge, Henry Cabot, 30 The Los Angeles Times, 221 MacArthur, Arthur, 13–15, 20, 129 MacArthur, Douglas: early career, 13–15, 18–25; dismissal, 185–86, 200–203; and 323 election of 1952, 208–12; in Germany, 32, 36; in Japan, 126–39, 141–47, 149–51, 154, 157, 161, 163, 165–66, 170–71, 173–9; in Philippines, 37, 39–40, 43, 51–59, 61 Manion, Clarence, 238, 315 Marquat, William F., 3, 131, 150–51, 154, 161, 170, 172, 174, 179–80, 300, 302–5 Marshall, George C., 38, 110–11, 114–15, 122, 145, 185–86, 201 Marshall Plan, 110–4, 119, 140, 158, 201, 204, 247 Maruyama, Masao, 125, 293 McCabe, Thomas B., 200 McCarthy, Joseph Raymond, 194 McChesney Martin, William, Jr., 199–200 McCloy, John J ‘‘Jack,’’ 72, 89, 216, 258, 283, 285 McDonald, David, 230 McKay, Douglas, 218 McKinley, William, 12–14, 16–17 Meiji Restoration, 124 Mellon, Andrew, 232 military marks, 78–80, 94, 113 Millikin, Eugene, 242 Mills, C Wright, 3, 264–65 Mises, Ludwig von, 100 Monroe, James, 19 Morgenthau, Henry, Jr., 65–74, 81–82, 84– 87, 89, 93, 110, 126, 139 Morrill Land-Grant College Act, 18 Moseley, George Van Horn, 41 Murphy, Robert D., 83, 86–88, 93, 114–15, 121, 227 Murrow, Edward R., 185 National Emergency Council, 54 National Guard, 22–23 National Recovery Administration (NRA), 52, 277 National Security Council (NSC), 145–46, 216, 223–24, 226, 228 NATO, 197–98, 204–10, 212, 224, 227, 254, 310 Nazism, 97, 260, 280 New Deal, vii, 8, 52–54, 61, 63, 65–71, 73, 84, 91, 126, 131, 142, 150, 213, 238, 241, 243, 249, 265, 267, 269, 277–79, 283, 306, 316 New Dealers, 62, 64–65, 70, 91, 126, 131, 139, 196, 212, 296 324 Index New York Times, 49, 90, 122, 185, 221, 242, 248, 258 Nietzsche, Friedrich, 38 Nippon Times, 164, 171, 303 Niville, 22 Nixon, Richard M., 215, 226, 235, 241, 248, 252–53, 256–57, 264, 287, 316, 318–19 NSC 68, 194–95, 207–8, 219–20, 225–26, 229, 255 Officer in Charge of Civil Affairs (OCCA), 35–36 Oliphant, Herman, 84–85 The Oriental Economist, 148, 165, 167, 171 Patterson, Robert, 138, 312 Patton, George, 33–34, 38, 129 Pearson, Drew, 228, 280, 314 Perkins, Frances, 54 Perry, Matthew C., 123–24 Pershing, John J ‘‘Black Jack,’’ 24, 30–31, 35, 38, 40, 273 Philippine Independence Act (TydingsMcDuffie Act), 54 Phillips, A W H., 251–52, 318 Pleven, Rene´, 205, 311 policy regime, 3, 5–7, 102, 119, 160, 181–82 Pope Pius XII, 109, 289 Powell, William, 189 price controls, 4, 27, 31, 41–2, 47, 96, 101, 103, 116–18, 120–21, 135–36, 140, 147, 153–55, 159–60, 164, 166–67, 171, 181, 187–90, 192, 194–96, 199–200, 213–14, 220–22, 242, 244, 248–53, 256, 272, 282, 295, 308, 313–14, 318 priority production system 134–35, 139, 152, 166 Public Works Administration (PWA), 53 Quezon, Manuel, 55–9 Rainbow Division, 23, 129 rationalization program (for Japan), 158–61, 166, 172, 181 Rayburn, Sam, 183 Reconstruction Finance Bank (RFB), 135, 148, 152–54, 171, 181, 299–300 Reed, William, 33, 171 Reichsbank, 95–96, 99, 114, 286 Reichsmarks, 78, 98, 103, 114 Reid, Ralph, 174, 302, 304–5 Relief for Occupied Areas, 84, 131–33, 139, 147, 157, 160, 165 Reuther, Walter, 230 Richberg, Donald Randall, 54 Ridgway, Matthew, 177–80 Robertson, Brian, 114, 117, 269 Roosevelt, Franklin D., 1, 5, 51–54, 56, 59– 60, 62–66, 69–74, 76, 81, 83–84, 90, 127– 28, 150, 183–84, 193, 196, 209, 211, 213, 217, 230, 243–44 Roosevelt, Theodore, 17, 21–22, 30, 38, Root, Elihu, 17–18, 30 Royall, Kenneth Claiborne, 105, 138, 147, 298 Rusk, Dean, 179, 305 Sadanori, Shimoyama, 166 Saltzman, Charles E., 141, 296 Samuelson, Paul, 251–52, 307, 318 Sargent, Thomas J., 7, 266 Schacht, Hjalmar, 48–49, 95, 276 Shoup, Carl, 169–70, 302–3 Showa-Denka scandal, 148, 153, 155 Smith, Adam, 61–62, 192 Smith, Walter Bedel, 75, 79 Sokolovsky, Vasily, 121, 292 Solow, Robert M., 252, 318 Sonderstelle Geld und Kredit, 115–16, 292 Soviet Union, 8, 77, 104, 111, 120, 138, 175– 76, 184, 251 Spanish-American War, 2, 11–13, 16–18, 30, 263, 269 Sparkman, John, 240, 316 Sputnik, 247 stagflation, 256, 260 Stalin, Joseph, 1, 77, 81, 86, 173 Stars and Stripes, 79 Stassen, Harold, 144, 212 State-War-Navy Coordinating Committee (SWNCC), 105, 114, 133, 139, 294, 296 Stettinius, Edward, 183 Stevenson, Adlai, 216–17, 230, 240, 313–14 Stimson, Henry L., 1–2, 4, 20–22, 39–40, 43, 50–51, 60, 71–72, 86–87, 109, 128, 258, 263, 274–76, 278, 281, 284, 293 Stresemann, Gustav, 45 Strout, Richard, 203, 310 Supreme Court, 7, 15–16, 54, 86, 199 Index Taft, Robert A., 73–74, 129, 190–91, 208, 209–12, 215, 222–27, 235, 269, 293, 311, 312, 313 Taft, William Howard, 1, 14–16, 21, 73, 129, 269 Takeshi, 297 Tarriff, 245–46 Tennenbaum, Edward A., 96, 286, 291–92 Tokugawa shoguns, 123 Tokyo Shimbun, 165, 300 Treaty of Paris, 12 Treaty of San Francisco, 180–81 Treaty of Versailles, 25, 28, 44, 95, 272 Truman, Harry S., 1, 5, 86–87, 108, 110, 127, 129, 133–34, 138, 145–47, 155–56, 166, 171–73, 175–79, 183–87, 189–95, 197– 213, 217–27, 229–31, 237, 259 Tsuyoshi, Inukai, 125 Tugwell, Rexford, 51, 276 U.S Army Corps of Engineers, 10, 15, 19, 23, 36, 51, 53–54, 56 United States Military Academy See West Point U.S.S Helena, 218, 220–23, 228 Valente, Anthony, 221 Vandenberg, Arthur, 128 Vinson, Fred, 198–99 Voorhees, Tracy, 170, 300–301 325 Walker, Walton, 177 Wall Street Journal, 221, 250 War Industries Board (WIB), 31, 273 Webb, Beatrice, 124 Weber, Alfred, 100, 102–3 Weber, Max, 100 Weimar Republic, 36, 104 Welfare, 2, 5–6, 102, 107, 194, 218, 231–33, 241–45, 255–56, 265–66, 290, 316 West Point, 10, 17–19, 21, 23, 33, 38 White, Harry Dexter, 65–69, 110 Whitney, Courtney, 131–32, 177, 310 Willkie, Wendell, 128 Willoughby, Charles A., 131 Wilson, Charles ‘‘Charlie’’, 218, 228 Wilson, Woodrow, 21–22, 25–31, 39, 43, 46, 48, 63, 112, 124–25 Wood, Leonard, 20–22, 37, 39, 271, 274 Works Progress Administration (WPA), 53 World Bank, 246, 317 Yomiuri, 165 Yoshida, Shigeru, 134–37, 154–57, 163–64, 167, 173–74, 181 Young, Robert, 140–41 zaibatsu, 126, 131, 137, 139–40 Zedong, Mao, 175 This page intentionally left blank Acknowledgments I have many people to thank for their help in this long and often arduous process First, I must thank the Mellon Achievement Fund and Michael and Ling Markovitz for the fellowships they provided during my time at the University of Chicago, along with Freehling and Mann travel grants The College of Family, Home and Social Sciences at Brigham Young University provided me a Research Grant and the History Department has proven generous in providing time and support for my work I could not have survived without this help Some of the ideas and research found here were originally published as “The International Origins of Dwight D Eisenhower’s Political Economy,” in the Journal of Policy History 24, no (Fall 2012); and “Becoming a Statein-the-World: Lessons Learned from the American Occupation of Germany,” in Studies in American Political Development 26, no (October 2012) My thanks to Cambridge University Press for permission to reproduce my conclusions here Throughout the research phase of this project I benefited tremendously from the help of able archivists at the Harry S Truman Presidential Library, the Detroit Public Library, the Columbia University Oral History Archives, the Dwight D Eisenhower Presidential Library (which also provided me its Presidential Library Travel Grant), the George C Marshall Research Library and the National Archives The archivists and librarians at each of these institutions helped with insights, suggestions, and an uncanny ability to track down my sometimes obscure requests I must thank the many research assistants who have contributed over the years—in particular Christina Baer, Jeremy Cooper, and Elisabeth Loveland—for patiently tracking down and entering a never-ending volume of data Their attention to detail and dedicated work was extraordinary My friend Greg Whisenant provided invaluable suggestions for 328 Acknowledgments improving the manuscript I am also grateful to Bob Lockhart at the University of Pennsylvania Press for taking this project under his wings so quickly and seamlessly Like many first-time authors, I benefited from the time and attention of dedicated mentors Bruce Cumings, at a critical juncture, offered a few simple suggestions that dramatically changed the way I saw this project He encouraged me to think of the American state as something that could exist outside of the borders of the country In addition, John Cochrane showed a great deal of patience in sharing his insights about the world of economics When I met him I told him I couldn’t “do the math.” Nevertheless, he took the time to help me conceptualize the economic world in a way that made much of what follows possible I have benefited tremendously from his help, support, and example as a scholar I must also thank Amy Dru Stanley who more than anyone taught me the craft of the historian Her passion for ideas and her skill at grounding those ideas in history remains my model In particular, I must thank Jim Sparrow His knowledge and passion for history have often left me breathless—and given me a notebook full of ideas, books to “look at,” and things to think about At every turn he has offered sage advice and critical support Most important, at moments when I have doubted myself he always believed in my project and then patiently showed me why I should believe as well He, too, has been a generous mentor and friend Finally, my colleagues at BYU have been extremely supportive as has the university through time and money to research In particular I am grateful for the help of Aaron Skabelund and Stewart Anderson Andrew Johns, especially, took time to help me work through intellectual and professional questions Finally, throughout these years my family, whether immediate, extended, or in-law, has always remained supportive and never secondguessed my decision to get a PhD or dedicate myself to this book (even when it meant missing events and functions) In particular, my wife Sara has always stayed true to my dream and supported me through this project, despite the obvious challenges that come to the spouse of a professor To her and our three sons (Spencer, John, and William) I owe much more than I can repay ... books in the series is available from the publisher Sovereign Soldiers How the U. S Military Transformed the Global Economy After World War II Grant Madsen universit y of pennsylvania press phil adelphia... at institutions functioning outside of official state lines (such as nongovernment organizations or the United Nations) as well as culture and cultural transmissions across borders.35 These scholars... positions in and around the army starting at the turn of the century These men rose through the army s ranks and, by the 195 0s, found themselves in powerful political positions The group included