Korean War Economic Mobilization Is More Relevant to the Current Pandemic than World War II

May 6, 2020
Photograph_of_Charles_E._Wilson,_formerly_president_of_the_General_Electric_Company,_taking_the_oath_of_office_as…_-_NARA_-_200261 (1)

Six months into the Korean War, Life magazine ran an article titled, “What Mobilization?” Despite the pressing national security challenge in Northeast Asia, the United States industrial machine was still unprepared to arm the American military. With photos of an empty factory floor, the Life article criticized planners in Washington, D.C. for not having solid plans and argued that essential military equipment, like tanks, wouldn’t be ready until the following year.

Less than a week after the article was published, President Harry S. Truman started using the powers granted to him under the recently-signed Defense Production Act (DPA). This spurred the mobilization effort and helped organize the government to meet the challenges of the ongoing war. Truman’s directive, however, never sought to mobilize the entirety of the economy or to displace the consumer economy. Instead, the Truman administration would work with industry and expand the American industrial base. This point was clear in early 1951 when Truman’s Council of Economic Advisors stressed the need to “beat many of our plowshares into swords,” just not all of them.

 

 

The challenges of mobilizing the U.S. economy in 1950 to fight the Korean War are surprisingly similar to the problems of mobilizing the economy to combat the COVID-19 pandemic. However, commentators, journalists, and other experts have recently overlooked these similarities and compared the current need to produce vast amounts of medical supplies and ventilators to the mobilization effort of World War II. The World War II comparison, however, proves ill-suited to the current crisis and the government’s response.

Unlike during World War II, the entirety of the U.S. economy is not being mobilized to fight COVID-19. The federal government has instead decided to work with the private sector to encourage and direct the production of masks, personal protective equipment (PPE), and other materials — only using the DPA in select situations. This conscious decision to not run roughshod over the private sector is much more akin to the mobilization of the U.S. economy for the Korean War, when the Truman administration sought to partially mobilize the economy without completely upsetting the consumer portion. In this regard, the Korean War, a war often called the “The Forgotten War” because of its limited coverage at the time and how it is overshadowed in public memory by World War II and the Vietnam War, also has been overlooked by analysts of the pandemic — and offers valuable lessons for the present.

Mobilization During the Korean War 

The decision to not fully mobilize the country after North Korean forces invaded South Korea in June 1950 was almost immediate. Within the administration, the National Security Resources Board headed by W. Stuart Symington, the former secretary of the Air Force, advocated for large-scale economic mobilization when North Korea’s hostilities began. However, Truman ruled out full mobilization and instead envisioned only a limited mobilization accompanied by aggressive wage and price controls.

At first glance, this was a surprising decision. American forces faced serious setbacks early in the war and the National Security Resources Board was formed in 1947 for this exact contingency. However, it never found a clear mission or place in the bureaucracy, never developed any policy papers, and never created a functioning interagency process. It was so ineffective that in May 1950, a month before the Korean War, Truman reorganized it into a presidential staff agency. Lacking support within the government, the National Security Resources Board’s call for full mobilization was discounted, and the agency was considered a “laughing-stock.”

In July 1950, Truman sent a special message to Congress asking for additional appropriations to acquire the supplies and equipment needed to prosecute the war and to increase military manpower. Although their response was delayed, with some members fearing the development of a garrison state, Congress eventually agreed in September to increase defense spending above the Fiscal Year 1950 budget of $14.5 billion, to raise $5 billion in taxes, and to grant the president broad authority to expand defense production and regulate the civilian economy under the DPA.

The DPA granted the president considerable authority to prepare the nation for war. It included the power to establish and assign priorities, to allocate materials and facilities, to requisition property, to make defense loans, to negotiate contracts for scarce materials, and to impose wage and price controls. The DPA was not as sweeping as the powers granted to President Franklin D. Roosevelt during World War II, but it was a powerful tool to intervene in the economy when no war had actually been declared.

While having the authority to use the DPA, Truman did not implement it until December 1950, six months after the start of the war, and used the powers of the DPA to bypass the National Security Resources Board and create the Office of Defense Mobilization (ODM) under the directorship of Charles E. Wilson, the president of General Electric and a former World War II mobilization executive. Under Wilson, the ODM created nineteen separate mobilization agencies to control almost every aspect of the economy, including the Office of Price Stabilization, the Wage Stabilization Board, National Production Authority, the Salary Stabilization Board, and the Defense Production Administration, which oversaw them all.

Although they now had a powerful agency to oversee the economy, neither Truman nor Wilson wanted the ODM to dominate the private sector. Rather, Wilson sought to expand industrial productivity by superimposing the defense program over the existing civilian economy. The New York Times reported that defense planners wanted to build new defense plants without converting or disabling factories that produced cars, refrigerators, and televisions. Additionally, the government placed strict price controls on all goods and services and subjected wages to government approval to reduce inflation. This plan, as Wilson himself noted in a national radio address, was not to create an economy of scarcity, but to intervene as little as possible into the lives of Americans. While shortages would exist, he stated that U.S. industry would still be creating more cars in 1951 than in 1948. There might be cutbacks, but this was hardly a calamity. This intent is reminiscent of President George W. Bush’s call for Americans to continue flying and shopping after the attacks of 9/11.

Although seeking to avoid setbacks and shortages, Wilson’s plan quickly ran into problems which plagued mobilization throughout 1951, undermining both civilian and defense production. Besides a two-month labor strike in early 1951 by the United Steel Workers of America over wage controls, the ODM faced challenges in resource allocation and a significant shortage of the machine tools needed to manufacture newer, more advanced weapons.

Shortages of copper, nickel, steel, and aluminum slowed production, and a lack of tungsten, used for producing armor-piercing ammunition, led to withdrawals from the strategic stockpile. To better manage raw materials, the ODM revived the World War II-era Controlled Materials Plan to evenly distribute steel, aluminum, and copper. By managing these materials, the ODM could control production, planning, and delivery of defense items to meet the nation’s production goals. The Controlled Materials Plan, however, was initially only applied to military and defense suppliers, while civilian producers were left to obtain their own materials from whatever was leftover. This situation left them unable to complete their own requirements and undermined Wilson’s effort not to hinder the consumer economy. To solve this problem, the Controlled Materials Plan was extended to cover both consumer and defense industries.

A lack of machine tools was another significant problem. By the summer of 1951, the nation had a 22-month long backlog of such items. When the war started, it was found that the majority of the machine tools used to fight World War II were old, outdated, and inappropriate to produce the parts needed for jet engines and guided missiles. Yet the production of new machine tools faced stiff resistance from industry. Manufacturers refused to accept government orders due to price ceilings and the fact that they lacked the working capital needed to invest in new machinery. The use of order pooling helped mollify the opposition, but the problem plagued the National Production Authority throughout the entire Korean build-up.

By early 1952, the materials crisis had mostly passed, but a recalcitrant Congress, pressured by dissatisfied corporate leaders, reduced the ability of the president to intervene in the economy when renewing the DPA in mid-1951. With less power and a second major dispute with labor in early 1952, which led Wilson to resign, the mobilizers within the ODM decided to readjust the current program. They sped up the production of critical items while delaying non-essential production, plant expansion, and long-term mobilization goals while ensuring military planners that their demands would be met in the future. This was possible not only because current production was meeting needs in 1952, but also because the defense budgets passed by Congress provided more than $100 billion over the next two years.

The growing defense budget, along with the decision to extend mobilization over a longer period, aimed at better preparing the nation for a future conflict with the Soviet Union and reducing any strain on the domestic economy. The fact that the conflict in Korea entered into a stalemate in 1952 with fewer operations also helped. By this time, the Truman administration, while never fully mobilizing the economy, had been successful in implementing an effective, albeit limited, mobilization plan in less than one year and had laid the industrial foundation for the Cold War.

Lessons for Today

The Truman administration’s experience with mobilizing and fighting the Korean War offers lessons for today. First, mobilization takes time. While gearing up industry and the economy in 1951 was quicker than previously seen during World War II, the process still took corporate leaders an entire year to mobilize the nation for the Korean War, even with their collective experience in guiding the World War II economy. Although President Trump invoked the DPA on March 18, he did not actually start using it until weeks later, when he compelled General Motors to start producing more ventilators and halted 3M from exporting masks to other countries. While companies are now working quickly to meet the current demand for medical equipment, the majority of materials will not likely arrive for at least another three months.

Additionally, companies like General Motors, Philips, and 3M, which are attempting to ramp up the manufacture of ventilators, masks, and personal protective equipment, cannot simply increase production overnight. Access to raw materials, like in the 1950s, will continue to limit production, especially with more global supply chains. This goes double for companies like Hanes and Parkdale Mills, who are converting entire production lines to manufacture PPE. They have struggled with unclear guidelines for producing medical equipment and face difficulties acquiring materials from unfamiliar vendors who sell industrial, or medical-grade, fabrics. Moreover, all of these companies are competing for scarce resources, as all nations are seeking materials to protect their medical professionals on the pandemic’s front lines.

Third, Trump, like Truman in the 1950s, is trying to cooperate with industry, but this can create setbacks and hinder production. Both the Truman administration and the ODM chief Wilson did not want to displace the consumer economy in mobilizing for the Korean War, but this created conflicts between defense and civilian production over access to materials, eventually forcing the ODM to take broader control over the distribution of raw materials. The Trump administration also has attempted to avoid forcing industry’s hand, instead working with corporate leaders and rejecting calls for federally mandated production, comparing that to “nationalization.” Nevertheless, mayors and governors have sharply attacked the market-based approach encouraged by the White House. This approach has left states competing against each other and the federal government for critical medical equipment, and recently several states have formed a consortium to consolidate their buying power. Like the expansion of the Controlled Materials Plan during the Korean mobilization, the Trump administration could take more steps to ensure the distribution of critical care equipment.

Preparing to Mobilize for the Next Pandemic

How can we prepare for another potential pandemic? If we look to the Korean experience for wisdom, we can see that the mobilization for that war was not only about Korea, but also about increasing industrial capacity for future challenges, especially a potential conflict with the Soviet Union. After World War II, the government reorganized the national security apparatus to fight the Cold War. By the Korean War, however, the industrial base had declined and the agency responsible for overseeing mobilization proved to be inadequate when the conflict began. The Truman administration purposefully worked with industry to modernize and expand the nation’s industrial base to ensure that if a war with the Soviet Union did occur, the nation could rapidly respond and quickly start production of needed materials.

Likewise, the United States in 2020 had policies and agencies in place to address a potential pandemic, including a National Pandemic Strategy. Agencies like the Center for Disease Control, the National Security Council, and Department of Defense had experience in managing infectious diseases, most recently during the 2014-2015 Ebola outbreak in West Africa, but this experience and preparation was not enough in the face of an actual pandemic.

While managing the current crisis, it is also time to prepare for the future. Just as the government used the Korean crisis to prepare industry and the nation for the Cold War, the country needs to use this time to develop the policies, skills, and infrastructure needed to prepare for future national epidemics or global pandemics by: growing the national stockpile of medical equipment and ensuring it remains up-to-date; expanding and maintaining diagnostic testing to quickly identify the ill; developing plans with industry to ensure the rapid conversion of production lines; and using the DPA to develop capacities and industries that make the United States less reluctant on global supply chains when facing a national crisis. By taking these steps and others, the U.S. government can avoid the loss of skills, knowledge, technology, and infrastructure that occurred after World War II and seize this crisis, like the Truman administration did, to prepare the nation for the future.

 

 

Dr. Douglas Bell is a Post-Doctoral Fellow with the Historical Services Division at the U.S. Army Heritage and Education Center and recently completed his PhD at Texas A&M University.

Dr. Conrad Crane is Chief of Historical Services for the US Army Heritage and Education Center. His most recent book is Cassandra in Oz: Counterinsurgency and Future War, published by Naval Institute Press.

The opinions expressed are those of the authors alone and do not reflect those of the U.S. Army, the Department of Defense, or any part of the U.S. government.

Image: U.S. National Archives and Records Administration (Photo by Abbie Rowe)

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