as the backbone of self-government.” In short, entrepreneurial capitalism would foster not only national independence but also civic virtue.71
During his stay in the Philippines, Stimson became familiar with MacArthur. But their time together (at least in Manila) proved short lived. In March 1929, newly elected President Herbert Hoover asked Stimson to come back to Washington to serve as secretary of state. Then, in August 1930, Hoover asked MacArthur to return as the chief of staff of the army. MacArthur hesitated. He enjoyed life in the Philippines, and leading the American army from Washington seemed like more headache than opportunity. So he deliberated—until his mother learned of his hesitation. She cabled him right away: “Your father would be ashamed of your timidity.”
“That settled it,” MacArthur said, and he quickly sent Hoover his acceptance.72
* * *
It is hard to imagine how the 1920s could have done more to prepare Dwight Eisenhower for his future. He had instinctively understood the weaponry and tactics of the next war. Moreover, he had found a mentor in Fox Conner who would guide his career thereafter. Conner had a plan for Eisenhower. The first part of the plan sent Eisenhower to the Command and General Staff College (which served to prepare mid-level officers for future command). Eisenhower flourished there, finishing at the top of his class. After this, Conner arranged for Eisenhower to become a part of the American Battle Monuments Commission directed by General Pershing. Eisenhower had the task of writing a handbook that explained the events commemorated by the war’s monuments and cemeteries. Ostensibly a guide for tourists, in reality it became a battle-by-battle summary of the war. More important, it gave Eisenhower a firsthand opportunity to walk the fields of France. By the time he had finished, Eisenhower had as clear an understanding of tactics in World War I as anyone. He also had a clear sense of the terrain Americans would travel in the next war.73
In 1927, Eisenhower entered the Army War College, where he studied industrial conversion. His thesis took up “the administrative and economic War Powers of the President,” including the changes necessary to move the normally free economy toward a controlled war economy.74 He considered everything from a command economy’s constitutionality to the nitty-gritty of administrative coordination, and recommended that “an agency … be set up … with a man at its head in whom is centralized full responsibility and adequate authority” to direct the economy.75 His work helped open a new door to his career when Fox Conner managed to get Eisenhower a position with Brigadier General George Van Horn Moseley within the army’s planning division in Washington. The National Defense Act of 1920 instructed the army to develop an industrial conversion plan, but by the late 1920s, it remained to be written. Because of Eisenhower’s work at the Army War College, Moseley wanted him to write the report.
In working through the many issues involved in that report, Eisenhower decided upon an approach that became a hallmark of his management style thereafter. He spoke with everyone who had played a hand in the last effort to create a wartime economy. While most saw the project as pointless—they would never “again [be] called on to arm and equip a mass army”—“some manufacturers … [were] ready to cooperate.” Most important, he discovered Bernard Baruch.76
Baruch eagerly talked with Eisenhower, explaining all the policies and powers he wished he had had. He also took to Eisenhower, and afterwards became a mentor along the lines of Conner. “He was ready to talk to me at any time,” Eisenhower noted.77 In time of war, Baruch explained, the government needed the power to set price controls, provide central administration and public education, and hold total power to defeat inflation—in short, it needed all the powers denied the War Industries Board. While the Hoover administration seemed unlikely to embrace a report that recommended such broad government powers, Eisenhower accepted Baruch’s ideas wholeheartedly and defended them to his superiors.78
By December 1930, Eisenhower had completed his Plan for Industrial Mobilization and forwarded it to Hoover (who promptly ignored it). He then wrote an accompanying article (published almost a year later in the Cavalry Journal), summarizing the contributions of the many people he interviewed.79 Several themes ran throughout. First, while the “Government has wisely refrained, as far as practicable, from interfering with the operation within our own country of fundamental economic laws.… In war all this changes.” For example, “demand becomes not only abnormal but is measured in terms of national self-preservation rather than in capacity to pay. Time is vital.” In short, war reversed the natural laws of capitalism.80
At the same time, the “problem facing the Federal Government in war is to be prepared to minimize damaging effects of sudden changes in industrial activity,” even while striving to “mobilize material, labor, and capital for the support of the fighting forces.”81 In other words, the less the state had to change, the better. Here, he adopted Baruch’s views, specifically on the question of outright nationalization of industry during war. “Who would run it?” Baruch asked. “After you … had taken it over and installed your Government employee as manager, what greater control would you have then than now! [Through taxation] you can choke it to death, deprive it of transportation, fuel, and power, divert its business, strengthen its rivals. Could any disciplinary means be more effective?” Besides, even “if [a federal] bureau could prove adequate to the task [of running industry] … the mere process of change would destroy efficiency at the outset.”82
Indeed, efficiency remained the watchword throughout the plan, and it imagined that competition between various sectors of the economy (and among departments within the government) might create frictions that would undermine industrial output. Such competition “must not exist.” To overcome this, “the government must know the national needs—and by wise and conservative measures direct the efforts of the population toward meeting those needs.”83 To do this, the plan envisioned centralized coordination, but also, and crucially, “the force of public opinion.” It encouraged the president to take advantage of the “unified and intensive public opinion” common at the outbreak of hostilities, because this unity, “[if] properly directed and employed under a popular leader, will make effective any reasonable, practical and efficient plan that may be adopted.”84
The third theme, and what proved the most controversial, centered on controlling price levels during war. Here, again, Eisenhower followed Baruch, who favored widespread price controls across the entire economy. On the one hand, this solved the problem of war profiteering; on the other, it addressed an issue in terms that would prove very important for Eisenhower in the future. “Inflation enormously increases the cost of war and multiplies burdens on the backs of generations yet to come,” Baruch argued. “In the inevitable post-war deflation the debt, of course, remains at the inflated figure. Thus the bonds that our Government sold in the World War for 50-cent dollars must be paid through the years by taxes levied in 100-cent dollars.”85 Altogether, Eisenhower’s report provided the basis for a planned economy along with the nuts-and-bolts of how to implement it—a valuable resource for American administrators when the next war came.
Thus, by 1930, one thing could be said about MacArthur, Eisenhower, and Clay as well as Henry Stimson. Each had, during the 1920s, gained invaluable experience in the tasks that awaited them. While the nation had made little effort to institutionalize military government as a core part of America’s external state, individual military leaders had gathered a great deal of experience and informal understanding of military government, political economy, and the art of governing. The initial lessons they learned came from the very practical problems of maintaining a civil society. They realized that it was already hard enough to subjugate a people and maintain some order. That task became impossible once military governments were seen as adding impoverishment to subjugation. Thus, in many cases they personally helped the local economy by cutting roads and building wharfs.
Put another way, military leaders absorbed Wilson’s contention that economic cooperation might foster peace, yet realized
