Military Industrial Complex (Issue)

FURTHER READING

Bailyn, Bernard et al. The Great Republic: A History of American makers of plowshares could, with the American People. Lexington, Massachusetts & time and as required, make swords as well. Toronto: D.C. Heath and Company, 1981. But now we can no longer risk emergency Johnson, Paul. A History of the American People. New improvisation of national defense; we have York: HarperCollins Publishers, 1997. been compelled to create a permanent arma- ments industry of vast proportions . . . . Yet Ketchum, Richard M. The Borrowed Years 1938– we must not fail to comprehend its grave 1941: America on the Way to War. New York: implications. Our toil, resources and liveli- Random House, 1989. hood are all involved; so is the very structure of our society. Manchester, William. The Glory and the Dream: A President Dwight D. Eisenhower, Farewell Address, Narrative History of America 1932–1972. New January 17, 1961 York: Bantam Books, 1974. The Oxford Companion to World War II. Oxford and New York: Oxford University Press, 1995. War II the relationship between the two was often one- sided and seemed perpetually set against one another, by the 1970s private business and the military devel- oped a formal and comfortable relationship of mutual support. Since the 1950s especially, military calls upon national resources have vastly increased and, for the MILITARY INDUSTRIAL most part, leading corporations have been the principal COMPLEX (ISSUE) beneficiaries of that demand. While payrolls, research grants, and political influence were large enough to Is the relationship between the armed forces and ensure a consensus for the system during the mid- to the industries that provide them with weapons a safe- late-twentieth century the whole complex has been guard or a threat to world peace and the American underwritten by a popular and almost unassailable democracy? Perhaps no other issue has raised as much anticommunist ideology. But some conservatives fear concern over the coalescence between economic and that the military-industrial complex keeps military political forces as the military-industrial complex, which spending at a level higher than that dictated by the strict today has formed a matrix of government spending, needs of national defense. They claim it leads to foreign initiatives, and ideological commitments. economic dislocation at home and dangerous tensions abroad, and that the separate parts of the military- In 1948 President Harry S. Truman (1945–1953) industrial complex will prove to be countervailing forces. submitted the second largest peacetime budget in Ameri- can history to Congress, justifying it as necessary to While the conjunction between economic and meet the threat of totalitarianism in the world. The political forces may have been new during the Truman budget came to $39.6 billion, with around $18 billion and Eisenhower eras, its roots lay deep in the mandates earmarked for military spending and international af- of Progressive reform which attempted early in the fairs. Such spending created a new industry in the century to rationalize the U.S. economic system and United States devoted to the production of weapons for integrate it with public policy. Even so, it was not until the Pentagon. This industry, which became known as World War I that close ties among the military, the the military-industrial complex, became one of the civilian government, and businessmen were formal- largest industries in the United States and a crucial part ized. Between 1914 to 1916, the federal government’s of the economy. In a pattern similar to World War II efforts to mobilize people, raw materials, production (1939–1945) mobilization, entire corporations were plants, and transportation proved slow and incompe- supported solely by government spending. Unlike World tent. In August 1916, the task of planning mobilization War II, however, there was no end in sight. As long as was entrusted to the Council of National Defense the Soviet Union continued to exist there was a reason (CND), which worked through the National Defense for military spending, even during peacetime. Advisory Commission (NDAC). In 1917, the CND was replaced by the War Industries Board (WIB) and Within the government, the voices of both private under its auspices American industry was organized business and the military have only grown stronger into commodity committees. These committees set since the turn of the century. While on the eve of World prices, priorities, allocations, and other controls and

636 GALE ENCYCLOPEDIA OF U.S. ECONOMIC HISTORY Military Industrial Complex (Issue) mobilized under their own rules. Meanwhile, the mili- two powers were engaged in a Cold War. But while the tary was torn by its own internal conflicts and competi- government had been involved in coordinating a mutu- tion and was in no position to plan the civilian econo- ally supportive relationship between the military and my. While business was organized along commodity business during World War I and World War II, the lines, the military was organized along operational Cold War dramatically changed this policy. The policy lines, and the two proved to be opposing. Answerable of ‘‘containment’’ committed the United States to a to neither a central planning agency within the military peacetime military-industrial complex for the first time nor to the WIB, each military branch entered the in American history. For the next 45 years there would market with large orders geared toward its own needs, continue to be a large standing army with inflated plus necessary surpluses. In 1918, Bernard Baruch defense expenditures, and large corporations supply- (1870–1965) took over the leadership of the WIB and ing the equipment and supplies. was given enough authority to force the cooperation of But with the coming of the Cold War, many the military. Throughout the rest of World War I, leading military and industrial leaders who had previ- businessmen and military leaders worked closely, and ously enjoyed a highly successful and lucrative war- usually harmoniously, to fill the needs of the wartime time system of military-civilian cooperation during economy. World War II, sought to preserve these advantages in During the inter-war years the military and busi- the demobilization period. During World War II, both ness leaders met regularly to draw up plans for eco- groups had kept one eye focused on the postwar period. nomic mobilization in case of war. Meanwhile, the In the military the desire to keep up budgets and the government facilitated coordination between the two desire of the Army Air Corps for independent status and left military tactics to the military and the economy fueled the arguments that the country should never to business leaders. The result was a series of industrial again find itself unprepared for hostilities, and that mobilization plans drawn up between 1930 and 1939. the country was bound to honor new and global In the end, the military realized the degree to which it peacekeeping responsibilities. was dependent on the cooperation and capacity of Continuing the cooperation that existed between business for the materials it needed, while business the military and civilian businesses during World War became more aware of what the present and future II was considered necessary to meet these new global needs of the military might be for supplies of all types. peacekeeping responsibilities. The nation’s new course In 1933, President Franklin D. Roosevelt’s (1933– began with careful consideration to the potential pit- 1945) attempt to plan for economic recovery after the falls. President Dwight D. Eisenhower (1953–1961) Great Depression adapted the scheme of the WIB for cautioned in his farewell address (1961) that though it his short- lived New Deal program, the National Indus- was important for the country to have a strong national trial Recovery Administration. defense in times of peace as in times of war, the In 1940, the coming of actual mobilization after so development of a military-industrial complex was not many years of planning, unleashed a torrent of expen- without its dangers. ‘‘In the councils of government, ditures that dwarfed those of both World War I and the we must guard against the acquisition of unwarranted New Deal. Altogether, some $315.8 billion was spent influence, whether sought or unsought, by the military- during the war, with the War Department accounting industrial complex. The potential for the disastrous rise for $179.9 billion and the Navy Department for $83.9 of misplaced power exists and will persist.’’ billion. In the end, a vastly inflated program of govern- For the next three decades after World War II, ment spending and its heavy concentration in a few huge military spending and a closely linked program of large corporations, like General Motors, Ford Motor foreign aid combined to prime the pump of U.S. Company, Chrysler Corporation, Bethlehem Steel, Gen- prosperity as no combination of domestic social pro- eral Electric, United States Steel, Du Pont Chemical, grams had ever been able to do. Military expenditures and AT&T became the standard policy for the wartime ranged from $37 billion in the mid-1950s to just over economy. $79.1 billion in 1969. The bulk of spending was done As World War II was winding down, the alliance directly by the military for research and material and between the Soviet Union and the United States, brought certain large firms were the beneficiaries of the funds. together by a common foe, Adolph Hitler (1889– In 1969, Lockheed Aircraft Corporation received the 1945), was deteriorating. Tensions between the two largest single share, more than $2 billion, McDonnell nations had existed since the Russian Revolution of Douglas with $1 billion and General Electric with $1.6 1917, and within a few years after World War II the billion.

GALE ENCYCLOPEDIA OF U.S. ECONOMIC HISTORY 637 Minimum Wage Law

The Vietnam War (1964–1975) brought orders ———. ‘‘Mobilizing the World War II Economy: rolling in as the Air Force and Navy sought to replace Labor and the Industrial-Military Alliance,’’ in Pa- planes damaged in combat, marking a peak in aero- cific Historical Review, vol. 42 (Nov. 1973). space production. The industry had its share of valleys as well. Erratic defense budgets saw sudden buildups Melman, Seymour. Pentagon Capitalism. New York: during the Korean War (1950–1953) and after the McGraw-Hill, 1970. Sputnik launch, but just as sudden drops occurred in Pursell, Carroll W., Jr., ed. The Military Industrial the mid-1950s and directly before the Vietnam War Complex. New York: Harper and Row, 1972. (1964–1975). The scientific component of military technology had also grown significantly since World War II. The closer relationship between the military and business MINIMUM WAGE LAW was paralleled by a similar closeness with scientists mostly housed in the big universities. By 1961 some 77 A minimum wage law is a piece of legislation that percent of all government spending for research and prevents businesses from hiring workers for hourly development was coming from the military. wages that fall below a specified level. The first In the 1990s, contrary to initial expectations, the minimum wage laws were passed in Australia and New military-industrial complex survived the end of the Zealand in the 1890s. In 1912 Massachusetts became Cold War. It reorganized itself with a series of military- the first U.S. state to pass a minimum wage law, and in industry mergers encouraged and subsidized by the 1918 Congress authorized the Wage Board to set administration of President Bill Clinton (1993–). The minimum wage levels for female workers in the Dis- ‘‘Big Three’’ weapons makers—Lockheed Martin, trict of Columbia. Five years later, however, the U.S. Boeing, and Raytheon—aquired a total of $25 to $38 Supreme Court ruled in Adkins v. Children’s Hospital billion in Pentagon contracts in the mid to late 1990s. If (1924) that minimum wage laws violated the Fifth they continue to receive federal monies, these new Amendment of the Constitution because they infringed military-industrial companies will earn billions more on the freedom of businesses and workers to form in the years to come. The Clinton administration’s five- contracts as they saw fit. The three dissenting justices year budget plan for the Pentagon calls for a 50 percent claimed that Congress did have the constitutional pow- increase in weapons procurement, from $40 billion per er to correct social injustices. In 1933 in the depths of year in 1989 to over $60 billion per year by 2003. the Great Depression (1929–1939), President Franklin D. Roosevelt (1933–1945) convinced Congress to pass How best to defend the United States in the post- the National Industrial Recovery Act (NIRA), which Cold War period remains a hotly debated topic. Some gave the newly formed National Recovery Administra- critics argue that on issue after issue—from expanding tion (NRA) the authority to establish national mini- NATO, to deploying the Star Wars missile defense mum wages. Although several states had passed mini- system, to rolling back restrictions on arms sales to mum wage laws by the mid-1930s hope for a lasting foreign regimes—the arms industry has launched a federal law seemed doomed when the Supreme Court concerted lobbying campaign aimed at increasing mili- ruled in 1935 that the NRA was unconstitutional. tary spending and arms exports. They argue that these initiatives are driven by profit and pork barrel politics. Two years later, the Supreme Court unexpectedly Others claim that these measures are forward-looking reversed its decision and gave states the constitutional and will create a safer, more democratic world. right to establish minimum wage laws, setting the stage for the Fair Labor Standards Act (FLSA) of 1938. The See also: Cold War, Vietnam War, War Indus- FLSA set the national minimum wage at 40 cents an tries Board, World War I, World War II hour, an amount that was increased in 1949, 1956, 1961, 1968, 1974, 1991, 1996, and 1997. The 1997 FURTHER READING increase brought the minimum wage to $5.15, which was estimated to affect about 10 million U.S. workers. Koistinen, Paul A. C. ‘‘The ‘Industrial-Military Com- Some economists have argued that minimum wage plex’ in Historical Perspective: World War I,’’ in laws have an unintended negative effect on the em- Business History Review, vol. 41 (Winter 1967). ployment rates of the poorest segments of society, ———. ‘‘The ’Industrial-Military Complex’ in His- many of whom are minorities. These critics argue that torical Perspective: The Interwar Years,’’ in Jour- raising minimum wage rates encourages businesses to nal of American History, vol. 56 (March 1970). rely more and more on automation to reduce their labor

638 GALE ENCYCLOPEDIA OF U.S. ECONOMIC HISTORY