War and the Leviathan State

0:00The creation of war and the growth of the central government is a commonplace. Randolph Bourne's observation that war is the health of the state has become a cliché. Still, as a cause of the development of big government in the United States, war seldom receives its due. Scholars and laymen alike more often trace the origins of our Leviathan to the New Deal. On this score, they attribute too much influence to the New Dealers as such. Franklin D. Roosevelt and friends never would or could have done what they did in the 1930s without the state-building precedence of World War I, which in many important cases they reinstituted with little more than and a change of name. But if World War I gets insufficient notice from students of the growth of government, World War II gets even less. Too often it is viewed as a discrete event, an occasion when government took on awesome dimensions but then relinquished the new powers after victory had been won, more or less returning the relations between government and civil

1:19to the pre-war status quo. Nothing of the sort happened or could have happened. A politico-economic undertaking of such enormous magnitude does not just come and go, leaving no trace. In fact, the big one left a multitude of important, enduring legacies. How the government organized Organized the Economy for War determined more than anything else how the central government would grow in the United States in the 20th century, and conscription more than anything else determined how the central government would organize the economy for war. In a multitude of ways, the military draft shaped not only the contours of the nation at War, but the course of its political-economic development throughout the past 80 years.

2:16Even by those who have studied it, the draft has yet to receive its full due. Like other wartime institutions, it has too often been viewed as transitory, as necessary during the periods of its imposition and as giving rise to no enduring effects. I shall argue Early in the 20th century, the federal government remained by modern standards, quite limited. But with U.S. entry into the Great War, the government expanded enormously in size, scope and power. It virtually nationalized the ocean shipping industry. It did nationalize the railroad, telephone, domestic telegraph and international telegraphic and Cable Industries. It became deeply engaged in manipulating labor management relations, security sales, agricultural marketing, the distribution of coal and oil, international commerce, and the markets for raw materials and manufactured products. Its bond drives dominated the financial markets. It turned the newly created Federal Reserve System into to a powerful engine of monetary inflation to help satisfy the government's voracious appetite for money and credit.

3:41All in all, contemporaries who described the government's creation as war socialism were well justified. During 1917 and 1918, the government built up the armed forces to a strength of about 4 million officers and men, drawn from a pre-war labor force of about 40 million persons. Of those added to the armed forces after the U.S. declaration of war, more than 2.8 million, or about 72 percent, were drafted. By employing the draft, the government got more men into the army and got them quicker than it could have by recruiting volunteers. Moreover, it got them in services at Far Less Expense to the Treasury. As the Army leadership had recommended and President Wilson had accepted even before the declaration of war, the government obtained its servicemen by following the Prussian model. Men alone, however, did not make an army. They required Barrics and training facilities, transportation, food, clothing, health care, they had to be equipped with modern arms and great stocks of ammunition. In short, to be an effective

5:04fighting force, a large soldiery required immense amounts of complementary resources. As the buildup began, the requisite resources remained in the possession of private citizens. Although manpower could be obtained by conscription, public opinion would not tolerate the outright confiscation of all the property required to turn the men into a well-equipped fighting force. Still, ordinary market mechanisms threaten to operate too slowly and at too great an expense to facilitate the government's plans. The Wilson administration therefore resorted to the vast array of interventions I have have mentioned, all may be seen as devices to hasten the delivery and diminish the fiscal burden of acquiring the resources needed to equip the huge conscript army for effective service in France.

6:02Notwithstanding these efforts to keep the Treasury's expenses down, enormous increases in taxes still had to be collected. National revenues increased by nearly 400% between fiscal 1917 and fiscal 1919, and even greater amounts had to be borrowed. The national debt swelled from just over $1 billion in 1916 to more than $25 billion in 1919. To ensure that the conscription-based mobilization could proceed without impediment, critics had to be silenced. The Espionage Act penalized those convicted of willfully obstructing the enlistment services with fines as much as $10,000 and imprisonment as long as 20 years.

6:58An amendment, the Notorious Sedition Act, went even further, imposing the same harsh on all forms of expression in any way critical of the government, its symbols or its recruitment of resources for the war. These suppressions of free speech subsequently upheld by the Supreme Court established dangerous precedents that derogated from the protections previously enjoyed by citizens under the First Amendment. The government further subverted the Bill of Rights by censoring all printed materials materials, peremptorily deporting hundreds of aliens without due process of law and conducting and encouraging state and local governments and vigilante groups to conduct warrantless searches and seizures, blanket arrests of suspected draft evaders and other outrages too numerous to mention. In California, the police arrested Upton Sinclair for reading Reading the Bill of Rights at a Rally. In New Jersey, the police arrested Roger Baldwin for publicly reading the Constitution. The government also employed a massive propaganda machine to whip up what can only be described as public hysteria. The result was countless incidents of insult, abuse and even lynching of persons suspected of disloyalty or insufficient

8:29Enthusiasm for the War. Persons of German ancestry suffered especially heavily. The connection of the draft with these official subversions of the Constitution was hardly coincidental. It was direct, intentional and publicly acknowledged. Consider the statement of a contemporary legal authority, Professor John Henry Wigmore, quote, where a nation has definitely committed itself to a Foreign War, all principles of normal internal order may be suspended. As property may be taken and corporal service may be conscripted, so liberty of speech may be limited or suppressed so far as deemed needful for the successful conduct of the war. All rights of the individual and all internal civic interests become subordinated to the national right in the struggle for for National Life." The formula applied again and again was quite simple. If it is acceptable to draft men, then it is acceptable to do X, for X is any government violation of individual rights whatsoever. Once the draft had been adopted, then, in the words of Justice Louis When the war ended, the government abandoned most, but not all, of its wartime control

10:01measures. The draft itself ended when the armistice took effect on November 11, 1918. By the end of 1920, most of the regulatory apparatus had been scrapped, including the The Food Administration, Fuel Administration, Railroad Administration, War Industries Board, and the War Labor Board. Some emergency powers migrated into regular government departments such as state, labor, and treasury and continued in force. The Espionage Act and the Trading with the Enemy Act remained on the statute books. And of course, the dominant interpretation of the War, including the belief that federal economic controls had been instrumental in achieving the victory, persisted, especially among the elites who had played leading roles in the wartime economic management.

10:58Economic Tsar Bernard Baruch did much to foster the post-war dissemination of this interpretation by Historians, Journalists and other shapers of public opinion. In the depths of the Great Depression, the Federal Government employed the wartime measures as models for dealing with what Franklin Roosevelt called a crisis in our national life comparable to War. Hence, the War Finance Corporation came back to life as the Reconstruction Finance Corporation, the War Industries Board as the National Recovery Administration, the Food Administration as the Agricultural Adjustment Administration, the Capital Issues Committee as the Securities and Exchange Commission, the Field Administration as the Connolly Act Apparatus for Cartelizing the Oil Industry and the Guffey Act Apparatus for Cartelizing the Bituminous Coal Industry. The military mobilization of young men returned as the Quasi-Military Civilian Conservation Corps and the Muscle Shoals Hydroelectric Munitions Facility became the Tennessee Valley Authority. The wartime U.S. Housing Corporation reappeared First as part of the Public Works Administration in 1933 and then as the U.S. Housing Authority in 1937. Along with the revived agencies came many of the wartime planners, including Baruch,

12:37George Peake, Hugh Johnson, John Dickinson, Felix Frankfurter, not to mention FDR himself as Advisors or Administrators. The temporary wartime abandonment of the gold standard became a permanent abandonment in 1933-34 when the government nationalized the monetary gold stock and abrogated all contractual obligations both public and private to pay gold. Obviously, the wartime precedents were crucial in guiding the new dealers and helping them to justify and gain acceptance of their policies. Notwithstanding the growth of government during the New Deal, the Federal Government during World War II achieved vastly greater dimensions, in many respects, its greatest size, scope and power ever, before or since.

13:36Again, conscription served as a springboard for the growth of the state. This time, the political pressure to adopt the draft mounted long before the United States entered the war. In mid-1940, the armed forces had only 458,000 officers and men on active duty. After the great German advances and the defeat of France in the spring of 1940, proponents of a new draft, including Grenville Clark, Henry Stimson and others who had led of the Charge for Conscription before and during World War I gained greater support, but opponents fought hard and the national debate raged furiously through the summer of 1940. Finally, in September, Congress enacted the Selective Training and Service Act, which authorized the conscription of 900,000 men. The law was extended and amended in the fall All of 1941 and again several times after the U.S. declaration of war.

14:40Eventually the draftees numbered more than 10 million men or about 63% of all those who served in the armed forces at some time during the war. Obviously many of those who volunteered for service did so to escape the draft and the consequent likelihood of assignment to the infantry. As before, a huge conscript-based armed force required enormous amounts of complementary resources to make possible its housing, subsistence, clothing, medical care, training and transportation, not to mention the equipment, arms, ammunition and expensive weapons platforms that now included tanks, fighter and bomber aircraft and naval aircraft carriers.

15:31Compared with the previous war, World War II was some ten times more expensive. Many new taxes were levied. Income taxes were raised repeatedly, until the individual income tax rates extended from a low of 23% to a high of 94%. The income tax, previously a class tax, became a mass tax as the number of returns filed grew from $15 million in 1940 to $50 million in 1945. Even though annual federal revenues soared from $7 billion to $50 billion between 1940 and 1945, most war expenses still had had to be covered by borrowing. The national debt held by the public went up by $200 billion or more than five-fold. The Federal Reserve system itself bought some $20 billion of government debt, thereby serving as a de facto printing press for the Treasury, increasing the narrowly defined money stock by 183 percent and cutting the value of money nearly in half between 1940 and 1948. Had the government relied exclusively on fiscal and market mechanisms to marshal the required resources, the expense of the war would have been far greater, probably

17:03much greater than the government could possibly finance. Accordingly, the government resorted to a vast system of controls and market interventions to gain possession of the desired resources without having to bid them away from other demanders in open markets. Although relatively few resources were simply confiscated or requisitioned, the effect was similar. By setting prices, directly allocating physical and human resources, establishing official priorities, prohibitions and set-asides, then rationing the civilian consumer goods In short supply, the war planners steered raw materials, intermediate goods and finished products into the uses to which they attached greatest importance. Markets no longer functioned freely. In many areas, they did not function at all. The economic system was transformed from one in which the market allocated resources with some peripheral government distortions to one in which the central government allocated resources with market, including black market, influences operating only at the fringes of the command economy.

18:21As before, the draft played a key role in justifying the government's imposition of a command economy. The same formula applied. If the draft is acceptable, then X is acceptable. as the eminent economist Wesley Mitchell put it in 1943, quote, after common consent has been given to conscription, civilians are morally bound to accept lesser sacrifices war imposes on them, end quote. Even the Supreme Court adopted the argument, as Justice Hugo Black advanced in a 1942 decision, Congress can draft men for battle service. Its power to draft business organizations to support the fighting men who risk their lives can be no less.

19:24World War II became the occasion for massive denials of human rights in the United States, apart from the involuntary servitude of the military draft. Most egregiously, about 112,000 innocent persons of Japanese ancestry, most of them U.S. citizens, were uprooted from their homes and confined in concentration camps without due process of law. Those subsequently released as civilians during the war remained under parole-like surveillance. Also, the government imprisoned some 6,000 conscientious objectors who would not comply with the service requirements of the draft laws. Scores of newspapers were denied the privilege of the males under authority of the Espionage Act, still in effect from World War I.

20:15Some newspapers were banned altogether. The Office of Censorship placed restrictions on the content of press reports and radio broadcasts and censored personal mail entering or leaving the country. The Office of War Information put the government's spin on whatever it deigns to tell the public, and military authorities censored news from the battlefields, sometimes for merely political reasons. The government seized some 50 industrial facilities, most of them in order to impose employment conditions favorable to labor unions engaged in disputes with the management. One indication of the enlarged federal potential for repression was the increase in the number The number of FBI special agents from 785 in 1939 to 4,370 in 1945. At the end of the war, most of the economic control agencies were shut down. Most, but not all. Some powers persisted, either lodged at the local level, like New York City's rent controls, or shifted from Emergency Agencies to Regular Departments, like International Trade Controls moved from the Foreign Economic Administration to the State Department.

21:39The military-industrial complex, which had grown to gargantuan size during the war, shrank but survived, lobbying hard for new procurements to restore the bureaucratic clout and financial health of its constituents. Federal tax revenues remain very high by pre-war standards. In the late 1940s, the IRS's annual take averaged about four times greater in constant dollars than in the late 1930s. In 1949, Federal outlays amounted to about 15% of gross national product. Before the war, The national debt stood at what would have been an unthinkable figure before the war, $214 billion and destined never to be any smaller.

22:36The prevailing interpretation of the wartime experience gave unprecedented ideological support to those who desired a big federal government actively engaged in a wide range and a range of domestic and international tasks. After all, the wartime central planners had carried out successfully a complex undertaking of enormous dimensions. They had waged a global war, marshaling, organizing and allocating the requisite resources to defeat two mighty adversaries while leaving American consumers relatively well off, at least by comparison with the suffering civilians of the Soviet Union. Union, Japan, Germany and Great Britain.

23:23Surely this great accomplishment had occurred because of the planners knowledge, abilities and devotion to the public interest. Surely a central government capable of winning the greatest war in human history could accomplish such relatively simple tasks as stabilizing the business cycle, guaranteeing all citizens is a good job and a high standard of living and regulating the industrial life of the nation to achieve greater fairness than the unfettered market. Surely. In this spirit, Congress enacted in 1946 the Employment Act, pledging the federal government to play an ongoing role as macroeconomic savior of the U.S. economy. Let me now try to pull together the threads of My Argument.

24:15Within three decades, from the outbreak of World War I in Europe to the end of World War II, the American people endured three great national emergencies, during each of which the Federal Government imposed unprecedented taxation and economic controls on the population. By the late 1940s, these government actions no longer startled the citizenry. Indeed, many Americans had come to regard them as desirable. Even businessmen, many of whom had continued to resist the encroachments of the New Deal bureaucrats throughout the 1930s, now looked upon the American Leviathan with an approving eye. The wartime experience, As Herbert Stein recognized, American businessmen tend to regard the regulations they are used to as being freedom.

25:17Rather than resisting the government's impositions or working to overthrow them, as being freedom. Rather than resisting the government's impositions or working to overthrow them, they look for ways to adapt to them. They try to position themselves so that the government policies will give them a tax advantage, channel a subsidy their way, or hobble their competitors. If even the business class with its immense resources and political clout would not work seriously toward the overthrow of the Leviathan that had come into being by the late 1940s. There was scant chance that any other powerful interest group would do so. Successful reaction had scant likelihood in any event because the post-World War II ideological climate bathed an active federal government in public faith and approbation.

26:19As Ben Page and Robert Shapiro have documented in their massive survey of public opinion, World War II stands as the most pervasive single influence on public opinion since the mid-1930s. Among other things, it transformed American public opinion concerning virtually all aspects of foreign affairs, opening the way for the imperial presidency and the use and the use of U.S. forces as world policemen. Opponents of global interventionism were smeared as isolationists and appeasers and thereby completely discredited. In 1953, Senator Robert Taft died and his followers soon abandoned their old beliefs and political commitments.

27:07Domestically, the people's devotion to the welfare state solidified. No amount of contradictory evidence seemed to dent the prevailing faith in the government's ability to create personal and social security and remedy the full range of human problems and pathologies. Nor did the Constitution serve any longer as a bulwark of individual rights. After World War II, as Edward Corwin observed, for the first time in American history after Under a war, the country did not revert to a peacetime constitution. Instead, the Supreme Court's wartime surrender to the President, combined with the cart launch it had granted to federal economic regulation in the late 1930s, to enhance federal power in many dimensions.

27:59Under these conditions, the only remaining barriers to the relentless growth of the central of Government arose from partisan and interest group opposition. Time would reveal that these barriers, ever shifting with the winds of partisan politics and immediate interest group objectives, could do no more than slow the onrushing Leviathan. It is not possible, said William Graham Sumner, to experiment with a society and just drop about the experiment whenever we choose. The experiment enters into the life of the society and never can be got out again. World War I, the New Deal and World War II provided the occasions for the greatest experiments in collectivization America had ever experienced.

28:54These experiments radically transformed the political economy institutionally and ideologically. The political economy of 1948 bore scarcely any resemblance to that of 1912, and the changes gave every indication of being irreversible. In the process by which this radical transformation occurred, the military draft played a central part. Conscription made possible the creation of a huge armed force, which in turn required massive amounts of complementary resources.

29:42To get these resources, the government had to raise taxes enormously and impose a great and a variety of controls on the market economy. That is, it had to violate traditional limitations on government action and override economic liberties. In light of the apparent success of the policies employed during WWI, the temptation to impose similar policies during the Great Depression proved irresistible. In large part, the New Deal consisted of quasi-war policies to deal with a pseudo-war emergency. Participation in World War II with its global scale and voracious demand for resources increased every aspect of the process by an order of magnitude.

30:35The draft permitted the creation of a huge army, which gave rise to vast military resource requirements that could be met only by imposition of a command and control system throughout the economy. By the late 1940s, the three great experiments had entered into the life of the society. With all the fundamental barriers to the growth of government having been battered down during war and pseudo-war emergencies, nothing substantial remains to impede their relentless growth of government.

31:15The National Service programs are spawned by the military draft. If there had never been a military draft, people would have considered it outlawed. The military draft, people would have considered it outrageous to have any kind of government service expected from people, particularly imposed on people against their will. Once the military draft had been institutionalized, which it was for many decades in this country, when I was growing up, all young men thought about the draft the way people think about thunderstorms.

32:09It's just something that could happen to you, it could strike you and there wasn't anything you could do about it, it was a fact of life. And people who get accustomed to conscription as a fact of life are far more prepared to discuss or consider the desirability of national service in general. And so we never get rid of these proposals for national service in one form or another and the Clinton administration is just the latest of many such proposals. How would you like the standard comments about previous wars to the Vietnam war problems? Would you like the standard comments to the Vietnam war problems?

33:08because the scale was so much smaller and because the government did not find it necessary to impose the same kinds of command and control system in order to get resources. The military budget at the peak of the Vietnam War was 9% of the gross national product and that was no greater than the military budget had been on average in the decade of the 1950s. in the 50s. So even though it meant some upsurge in military spending, the magnitude was just very, very small. Now, it did have other important effects, however. As we all know, the protests against the draft during the Vietnam War convinced the Nixon administration to terminate the draft. And whatever else we may think about Nixon, that's certainly a positive The question you ask about the war on poverty, I think has a kind of interesting peripheral connection with what I've been saying, and that is that wars are great crusades, or at least in the 20th century have been great crusades, in which people could look upon the government as doing something highly desirable, something in which people could look upon the government as doing something highly desirable, something in which

34:37Everyone was alleged to have an interest, and many people looked back upon them as successful endeavors. And as a result, every time a politician wants to whip up support for any program whatsoever, it's called a war. And to some extent is organized and treated as a war, at least for propaganda purposes. So the war on poverty had that element to it. Johnson hoped that this would get support by Making public believe that it was somehow a policy that was not, in fact, but nonetheless, for the most part, it simply created a competing demand on the budget with the war in Vietnam. Yes, sir.

35:23Thank you for your remarks. I was particularly struck with one, which is not here as lofty as what he's been talking about, but I was in that group that went off to World War II, from the Citadel. We were interrupted, we volunteered to go, and then finished after the war some others. But you mentioned something about the infantry, and it's brought back old memories that I thought might resonate with someone here. We're getting ready for our 50th reunion of the Citadel class of 1944, the earliest of which we finished in 1947 because of that late-uncloseness. But what we determined was, as we were getting ready last fall for this reunion upcoming, that our class chairman announced that we had more casualties in World War II than any other Citadel class.

36:18He made a remark, this is not generally a humorous gentleman, but he says, Yes, we were just the right age to be second lieutenants in the infantry, and they were not well cared for. That's true, that was just one of many reasons why men wanted to avoid the infantry. Even if you lived, it was not pleasant. Yes, sir? Could you identify the aspects of our society that are, whose interests are served by centralization and war? Well, there are many, actually. Could you name a few? Political leaders are the principal group.

37:04Which political leaders? The President is the principal public official, benefits from war, as it was mentioned, but Mr. Denson mentioned that war presents a president with the opportunity to become immortal, and few have been willing to deny themselves that chance. Science. Obviously there are many people with an interest in war. People who sell war goods have an interest in war, although I would say on behalf of the defense companies that it's not really war they want so much, it's just selling their stuff. And they're probably happier to do it in peacetime than they are in wartime. But nonetheless, they need at and at least the threat of war in order to keep the orders flowing.

38:00So the munitions suppliers, public officials, particularly in the executive branch and the president in particular, high military officers really need war to themselves become leading figures in the history of their organizations. Even if you become flag officer, it's never the same if you do it exclusively in peacetime. So the military-industrial complex that President Eisenhower warned against is a capsule description of those people who stand to gain in terms of status and fame and command over resources from war or even the threat of war.

38:46Paul, thank you very much. Thanks.