“What enables the wise sovereign and the good general to strike and conquer, and achieve things beyond the reach of ordinary men is foreknowledge.” (Sun Tzu, On the Art of War, 500 B.C.)
President Truman, by affixing his signature to Public Law 253, 80th Congress, entitled “National Security Act of 1947,” ushered in a concept of national defense new to both laymen and professional military men alike. Among the more important provisions of this legislation is the establishment of the Central Intelligence Agency. For the first time in the history of the United States, and some 2000 years after Sun Tzu set forth the principle of foreknowledge, a statutory agency is charged with the responsibility “to correlate and evaluate intelligence relating to the national security, and provide for the appropriate dissemination of such intelligence within the Government, using where appropriate existing agencies and facilities.”[i] This responsibility of C.I.A. is definitely keyed to foreign intelligence by law; however, amid the cloak and dagger surroundings of the word “intelligence,” there is no compulsion to provide information on the economic war potential of foreign powers.
In the past our grand strategy has been predicated on our geographical position permitting a choice of peace or war. This very same geographical position has permitted this nation to neglect foreign designs in years gone by. This stand has been taken by the powerful segments of public opinion that believed the Atlantic and Pacific Oceans were natural walls of defense. The advancements made in this generation have resulted in no place in the world now being far removed. We can no longer take ostrich-like refuge in the belief of yester-years that the United States is virtually invulnerable to military attack. Distance no longer provides the protection which it afforded before the advent of long- range aircraft and guided missiles. Unfortunately, there are small groups who still cling to the belief that the oceans bordering the North American Continent furnish all the security necessary. Isolationism is no longer an appropriate safeguard to the peace and security of the nation. We must take the realistic viewpoint that a third world conflict may occur. It should be axiomatic with national planners that any future global conflict will be thrust upon the world by sudden attack without warning to the nation that is the target for destruction, and the United States with its great production capacity may be that target. There will be no transition period, while other nations are engaged in hostilities, to make up the American Public’s mind. There will be no time for paper planning, for dawdling, for incompetence, for setting up our industrial machine to get it into maximum production, nor for training great bodies of men to fill the ranks of the armed forces. We shall not be given time to mobilize before we are at war. We must have foreknowledge in order to anticipate hostile moves, prevent surprise attacks, and initiate necessary counter-measures. It is imperative that a part of this foreknowledge be based upon strategic intelligence on the economic war potential of all countries of the world. The contemporary responsibility of the United States in the affairs of the world demands that such information be known.
History teaches us many lessons from which we must learn the mistakes and pitfalls of the past in order to prevent their recurrence. Utilization of all past experience must result in a clearer approach by national leaders to the problems of today and those problems yet to be unveiled in the passing panorama of world history. Unfortunately, we have little or no experience in the field of evaluating foreign economic war potential. Compounded on this lack of experience is the national policy of the past—one of making major preparations for war after a world conflict has begun, and only after the sovereignty of the United States has been violated. One fundamental result of the recent war is the position of leadership passed on to this government. With this new role of leadership has come the knowledge of how small and dangerous a world this is, how directly the acts of others affect us, and how our actions affect them. Our leaders are now confronted with a situation wherein the eclectic interpretations of agreements and treaties, the varying ideologies and concepts, create vast differences among world powers. Under the United Nations Charter, all members, large states as well as small states, have pledged themselves to settle their international disputes by peaceful means in such a manner that the peace, security, and justice in the world are not endangered. The evidence in the two years since the cessation of hostilities shows that world government is still but a dream and national responsibility is still self-centered.
Recognizing this fact demands that our statesmen be the best informed leaders in the world. In order to insure this we must have intelligence work performed on a vast scale to provide for the flow of information on economic war potential as well as actual situations. It is the responsibility of the C.I.A. to furnish the latter type of information, but nowhere is there compulsion to provide information relative to foreign economic war potential. The mission of strategic intelligence should be to collect, analyze, evaluate, and disseminate information on political motives and estimate the economic war potential of all nations in order to anticipate hostile moves, prevent surprise attacks, and initiate necessary counter-measures. In addition, this information must reveal the combined resources of any possible adversary and estimate the capabilities of probable allies.
Economic War Potential
Mr. Brooks Emeny, in his work, Great Powers in World Politics, has placed nations within one of three economic categories, agrarian, industrial, or a balanced economy. An agrarian economy enjoys the distinct advantage of providing the necessary food to support its population with the possibility of surpluses available for export in return for the industrial products that are needed. These countries lack the coal and iron necessary to support industry, or they have not had to develop their potential industry. Two outstanding examples of this type of economy are the South American countries and the Russian Zone of Germany. Those nations whose economy is industrial have the necessary power resources and the availability of raw materials for heavy industrial production. In turn this class of nations lacks the necessary food resources to properly feed its people. Great Britain is the most prominent nation in this category. The last type, a balanced economy, is able to raise sufficient farm products to feed the population and, at the same time through the availability of power resources and raw materials, produce industrial tools and equipment. Today only two countries approach a balanced economy, the United States and the Union of Soviet Socialist Republics.
The technological advances and demands of warfare in this age draw on all types of economies for the waging of global warfare. Nations are drawn to the balanced economies to supply their needs. Thus we find diplomatic maneuvers to form alliances and alignments between the balanced economies and the agrarian and industrial economies. At the present time the two balanced economies of the world are maneuvering to ensure that these alignments are favorable to the security of the individual economy.
With all the benefits that have come with the Industrial Revolution, there has also come the necessity for mobilization of all the resources of a nation’s economy as the foundation of armed conflict. In this era “war is no longer simply a battle between armed forces in the field—it is a struggle in which each side strives to bring to bear every material resource at its command. The conflict extends from the soldier in the front line to the citizen in the remotest hamlet in the rear.”2 The terminology for this statement of fact is ECONOMIC WAR POTENTIAL. In their Introduction to War Economics the Brown University Economists have defined it as “the capacity of a country to put its economic resources into those forms that will directly aid the prosecution of war.”
The National Wealth of the industrial and balanced economy is based on minerals that are the very foundation of the modern machine age. Thus far in the twentieth century, these two types of economies are entirely dependent on iron and coal. Possibly at some time in the distant future these pillars of industry will crumble as successors move in and take up the burden of industry. Until that time, however, we must never forget the importance of the industrial twins. Deposits of minerals containing iron ores cover between four and one-half per cent to five per cent of the earth’s surface. These sources are so abundant that the only necessity for the utilization of the deposits is the commercial feasibility of extraction and smelting. Iron’s versatility makes it the ideal raw material of today’s industrial society and, at the same time, the critical component of a war machine which is power-driven and in turn is derived from other power-driven machines.
The importance and value of iron depends not only on the availability of the ores, but it is further dependent on coal, the reducer and source of energy. Coal is still the single leader as a source of power. It has many uses in both contributing directly to a potential war machine and in the everyday civilian economy. The largest consumer of coal is the railroad industry, despite the advances of diesel locomotives. This is particularly the case with economies that are not as advanced as our own. Close behind the railroads are the many stationary power plants in factories and electricity generating plants that use steam. Industrial production relies on coal to produce the heat that is necessary in the varied industrial processes requiring high temperatures. The real importance of coal to the economies of the world is best illustrated by the recent discussions and programs for increasing the amount of coal mined in the Ruhr Valley. This single area is held by the United States to be one of the keys to the recovery from the devastating economic effects of the recent war in Western Europe. In turn, coal is the Ruhr’s most important commodity. Beyond coal’s importance as a source of power it has a new role as the basis for many synthetic products. There are few, if any phases of the economies of the world that are not dependent upon coal, be it for peaceful pursuits or the pursuits of aggression.
The wide employment of iron is found mostly in its running mate, steel. Its uses, including alloy steels, would fill many pages, but steel and its alloys are indispensable in mass production founded on the principle of quality goods produced in quantity. Some of the countless thousands of uses to which it is put for war purposes are machine tools for production, artillery, rifles, armour plate, factories, etc. Large industrial nations possessing the facilities for the production of vast quantities of steel are the very economies capable of producing the above mentioned implements of war. This potential source of materials for a war machine in any future conflict has a very good precedent from the recent war. Three out of every four tons of finished steel produced in the United States during the last conflict were used directly for war purposes.
In any analysis of the economic war potential of iron and steel, it would be idle folly to overlook the employment of scrap metal. The shortages of these metals occurring during periods of unprecedented demand required remedial measures. Aside from the construction of increased production facilities, which may not be completed in time to contribute to an existing war effort, the introduction of scrap iron will increase the economic war potential. Even when there is an abundance of the raw material and the facilities to process it, the use of scrap may be relied on. All nations, including that vast industrial giant, the United States, depended upon the use of scrap in the recent war. Those naval officers anchoring in Long Beach, California, prior to July 1941, as ship load after ship load of scrap iron was shipped to Japan, need no further example of this fact. It is well known now that Japan’s program of purchasing scrap iron, during the decade preceding the embargo placed on its export in July, 1941, was for the purpose of building up her economic war potential. In our own country the many scrap drives held throughout the country during the period 1942 to 1945 produced the same end result—more steel production.
Coal, iron, and steel are the basic materials of contemporary industry. The war machine of this generation cannot operate with just these basic needs. Petroleum is an absolute necessity. It is second only to coal as a source for producing mechanical energy. Petroleum reserves are found in varying amounts in thirteen countries in the world. The advent of the airplane as a major military weapon and for commercial transportation, with its high consumption rate of gasoline, has seriously depleted many reserves which normally would not have been tapped for some years if the war had not occurred. The ease with which oil is converted to mechanical energy has increased its usefulness. Man has applied this energy to drive engines in the factories, to operate automobiles on the highways, to drive locomotives pulling the trains, and to sail ships on the high seas. If tomorrow we were to awaken to the discovery and complete distribution of another source of energy, the intrinsic value of oil for lubrication alone makes it vital to mankind’s mechanization. Until man eliminates friction, if ever, petroleum products will play a large part in the industrial world.
Mechanized armies with their countless thousands of trucks, tanks, and combat vehicles, from jeeps to the multi-ton tank retrievers, are all consumers of vast quantities of petroleum products. Navies are just as dependent on petroleum, which is the main source for energy to drive turbines of men- of-war. The civilian economy during an actual war is just as active as during peacetime in the use of petroleum products unless rationing of some type is introduced into the economy. In turn this rationing has importance in contributing to the economic war potential of an aggressor nation.
Should some other material be developed (atomic energy, possibly), the importance of petroleum as a fuel would decline. With the advent of guided missiles powered by liquid oxygen, ethyl-alcohol, or other chemical fuels, high octane gasoline will be used less and less to propel the weapons of war in the sky. Until that time we must be realistic and recognize the absolute dependence that is placed on petroleum, and the importance of it to the economic war potential of a nation. Many countries lack the necessary petroleum reserves to provide adequate production of its products. In some nations, particularly Germany, the need for additional sources required enormous expenditures for the development of synthetic fuels. Any nation possessing sufficient petroleum reserves will not have to waste time and labor, to say nothing of the drain on production facilities of the basic industries, to provide the plants for developing synthetic fuels.
Another metal of prime significance to a war machine is aluminum. Analysis of the rocks of the earth’s surface reveals that about eight per cent of their contents is aluminum. While this would indicate a rather large distribution of this metal, very few of the minerals that contain it are commercially important as a source of the metal for it cannot be extracted economically. The primary ore of aluminum is Bauxite. The reduction of these usable ores depends upon large amounts of electricity, which in years past has been an obstacle to the production of this light metal.
Aluminum has come into the realm of strategic importance with the advent of the airplane. The reason for this is its light weight, high electrical and thermal conductivity, and reflectivity. The impact of military aircraft requirements, the many technological developments in the metallurgy of aluminum, and the completion of the many large hydro-electrical projects have very materially increased the production of the metal, even to the point where over-production resulted in many countries. Aircraft manufacturers were the prime users of aluminum in the recent test of industrial prowess. Secondary uses of the metal are found where- ever the need for light weight is predominant. This runs the range from the mess kit carried by the mighty infantryman in the field to the many fittings necessary to complete a combatant vessel for the Navy.
The steel upon which this age of civilization is based would not be possible if it were not for the many metals that are used in its processing. Heading the list of metals necessary for the production of steel is manganese. “Under existing metallurgical technique, manganese is the only agent which can be economically employed as a deoxidizer and desulphurizer in blast furnace operations.”[ii] For every ton of steel produced, 14.3 pounds of this agent are necessary. It becomes evident from this fact of metallurgy that any country desirous of embarking on a policy of military aggression must have available for use manganese production to devote to the steel industry. This metal is found in upwards of one hundred and fifty different minerals; however, but six of these minerals contain enough of the metal to make commercial extraction economically feasible. Aside from the critical need for manganese in the production of steel, it is important as an aluminum alloy. Aluminum-manganese alloys are used extensively in places where light weight and high corrosion resistance properties are the principal requirements.
The special alloy steels are the backbone of the mass production machine tools. Without these specialists of metals, no cutting tools would be able to withstand the necessary heat and strains encountered in machining steel. In order to obtain the different alloys, industry combines tungsten, chromite, or nickel with steel to derive the necessary properties desired. Tungsten in the form of tungsten carbide is the basis of most machine tool production. It provides a high melting point and has made steels alloyed with tungsten especially useful for cutting tools where they are subjected to high temperatures. Without the availability of these tools the principle of mass production in industry would be an impossibility. Thus we would find, for one example, all rifle production limited to the laboriously slow hand process, as would most every other weapon used in modern war. The importance of tungsten to economic war potential is based on its absolute reign over the mass production industries. Beyond this important need is the direct war use of this metal in the cores of small arms ammunition to give armor-piercing properties to the ammunition.
Nickel ranks low in the total world consumption, but ranks high on the list of materials essential to a war potential. It is found in steels for the manufacture of transport equipment and heavy machinery. Directly employed in the war machine, it is used in all heavy gun construction and in the making of armor plate so essential to ships, aircraft, and tanks. The largest use for nickel in everyday life in war or peace is in the many products derived from Monel metal and stainless steels. Nickel is not confined to use in the manufacture of steel alloys alone. It is found in plumbing fixtures, batteries, and alloyed with copper to form the bullet jackets in small arms ammunition.
Chromite, the last of the important steel alloying agents, is used because of its chemical stability, neutral character and high resistance to corrosion. It is used extensively in the manufacture of gun carriages and armor plate. These three metals are by no means the only three used in the manufacturing of alloyed steel, but are believed to be the most important for their direct contribution to an industrialized war machine.
Copper as a metal ranks second to iron in its usefulness to the industrialized economy. Ores containing copper are found in commercially feasible locations and amounts in sixteen countries in the world. The “red metal” is next to silver as the best known conductor of electricity and hence we find its greatest use in the field of electricity. The use of copper has advanced with the field of electricity and more recently in the field of electronics. There is scarcely a piece of communication equipment existing today that does not contain some copper in it. A program of war production would require vast amounts of copper to provide the essential communication equipment for the exercise of command, electronic detection devices, and for the many electronic controlled production processes in producing the war machine.
Another metal vitally important to the industrial giant is antimony, a hardening agent in alloys of lead, tin, aluminum, and copper. Antimony’s importance is derived from its relative cheapness. Other metals will do the same work but only at a high cost. As costs enter into a war effort, though not as an obstacle, we can not overlook the importance of this metal. The largest consumption of antimony is found in babbitt and other antifriction bearing metals. The importance of these products are best illustrated by evidence from the recent war. Prime strategic targets of the air forces were all bearing producing plants, as a means of reducing the effectiveness of the industrial machine behind our adversaries.
The “mineral extraordinary” of this generation has been purposely neglected until this time. Uranium’s importance to a war effort was thrust upon the world August 6, 1945, with a violence that is unparalleled in history. This star, on stage down center, has been and is the subject of extensive international debate. The effects from the weapon derived from this mineral are well known to all. It is mandatory for us to consider this mineral within the realm of economic war potential, because of its inherent importance as a weapon of war or as a future possible source of the energy necessary to produce the industrial war machine of the atomic age. The nations of the world have not yet seen fit to tame atomic energy through international control. If at some time in the future an accord is reached for the control of atomic energy by international inspection, all evidence will be available and its war potential well known throughout the world. If this agreement is not reached, it is absolutely essential that this goverment include this mineral in a program of strategic intelligence on economic war potential.
The foregoing discussion covers only the more important elements of a nation’s economic war potential. It is beyond the scope of this paper to discuss all materials vital to an industrial war effort.
Thus far we have discussed the basic materials that compose a nation’s material economic war potential. All of these raw materials are useless without the factories to process and produce the products needed for war. A machine tool industry is more important in days of peace than the size of an army. During peacetime, machine tools are employed for the production of presses, automatic screw machines, millers, etc. When hostilities commence these very same machines are needed to build the modern mechanized army. Every industry, no matter how small, has some contribution to a nation’s economic war potential. This may be in a direct contribution such as the United States automobile industry converting to tank production during the war; or it may be an indirect contribution such as a manufacturer of luxury goods converting his plant to the production of civilian necessities, thus freeing other production facilities for the manufacturing of goods used directly to prosecute the war. A program of intelligence, working towards the goal of knowing the industrial potential of a nation, must collect data on all types of industries and the plants behind a given industry. Factories are just as important in the field of strategic intelligence as the location of an armored division is in operational intelligence.
In evaluating a nation’s economic war potential we must remember that the raw material is useless without the factory; and in turn, these essentials are of no use to the nation unless it has the labor force to run the production machine. Man power is essential from the mining of the raw materials until the ultimate distribution is effected and products expended by the user. The labor potential of any nation is not static. On the contrary any labor potential is a dynamic force in the total of that nation’s economic war potential. The total amount of productive labor force which can be mustered behind a nation’s war effort is motivated for various reasons. It can be for monetary or material inducements, for patriotic reasons as evidenced by the many hundreds of thousands who were employed in our wartime industries, or by compulsion as is the rule in totalitarian countries, A large, expanding population is the source of man power for the armed forces and a large labor force, but mere population figures are no standard for estimating the labor potential of a given country. In any discussion of labor’s contribution to the economic war potential, we are not greatly concerned with the total numbers of persons employed, but we are greatly concerned with the amount of production these workers can provide to a war machine.
During peacetime production, all effort is expended in producing for the civilian economy. When embarked on a plan of war expansion, shortages in the total labor force develop as men leave to enter the military service. Production schedules demand vast quantities of goods to be delivered in relatively short periods of time. Peacetime production is based on normal working hours. In this country the forty-hour week was an accepted fact in industry before the war. In many countries it is much longer, which in turn limits the amount of expansion which the labor force can withstand. It is possible to increase the labor potential over and above peacetime requirements by many means. A single worker who is working but forty hours per week can work a 54 hour week with little or no ill effects, which will increase the labor potential. Unemployment is feared by all during the days of peace. During stimulated war production efforts, unemployment decreases as workers are needed to produce the mechanized war machine. During 1932, the height of America’s depression, there were between 13 and 14 million unemployed in this country. The number of unemployed during the war years was but 790,000. The industrial output was increased considerably by the reduction of unemployment. This is but another means of increasing the labor potential. In some countries, particularly totalitarian, there is little or no unemployment which in turn again restricts the amount of expansion which the labor force can undergo. These are but two illustrated cases of how the labor potential may be increased. Other means of increasing this potential are by the employment of retired personnel, women not ordinarily employed, and the addition of adolescents in the age brackets of 16 to 18.
During the war many countries employed slave labor to augment the national labor force. Civilizations in the past have been built entirely on slave labor. In the evaluation of any country’s economic war potential, the item of slave labor must always be considered. The attitude of this type of labor toward its job is not as high as the worker motivated by patriotic reasons; none the less, the slave laborer is a producer and as such must be recognized as contributing to the labor potential. Certain economies in the world today are based on the very same slave labor principles. Concentration camps still exist in which the inmates, engaged in forced labor, produce for the state.
So far in this discussion of labor only the physical number of man hours has been considered. The actual labor potential is further determined by the scarcity or abundance of skilled and semi-skilled labor. In gigantic industrial production efforts, more skilled workers are needed by industry. Training programs must be instituted which will provide the additional skilled workers. Countries possessing a low standard of education are handicapped in the development of large bodies of skilled laborers. The labor potential for a given country is the availability of trained production employees correlated to the total of man hours of production available.
With the raw materials available and the necessary trained man power to run the factories, the factor of transportation also must be considered as contributing to economic war potential. The vital role of transportation in the war effort can never be overlooked. Minerals must be transported to the centers of manufacturing. After the processing they must again be moved to the points of distribution and then transported to the ultimate consumer. The late Joseph B. Eastman, while Director of Defense Transportation, summed up the importance of transportation when he said, “Without transportation we could not fight at all. In these days (during World War II) there is nothing which enters into war, from troops to bullets, which is not dependent absolutely on transportation.” Within the realm of transportation factors are the railroads, air facilities, steamships, networks of highways, trucks, inland waterways and canals, barges, and petroleum pipelines. One of the biggest factors in any increase of existing transportation facilities is the amount of dead time involved in the employment of the transportation facilities. A given truck operating on the route between Chicago and New York makes a trip west with a full load. If the return trip is made empty, we have dead time that in effect has reduced the potential of the truck. Any type of control either by industry or by governmental regulation or decree which reduces dead time is increasing the transportation potential.
Railroads are capable of handling diversified loads. In most cases the railroads are employed to their maximum. An example of increasing the utility of both the transportation facility and the overall industrial potential of a country thus is illustrated. A large coal field is located in the northern area of a country. Iron ores are located in the central part which is 800 miles south of the coal field. In order to increase the utility of transportation and at the same time increase the iron output, smelters were constructed at both sites. By hauling coal on the trip south and iron ores on the trip north no dead time occurs. This has added to both the transportation potential and to the iron production potential.
Trucking is a big industry within the transportation system of a country which does not rely entirely on the railroads for hauling necessary freight. The amount of truck traffic which can be accommodated is dependent on the network of roadways existing. Super express highways can handle more traffic faster than the small dirt roads.
During the thirties the world was amazed with the mileage and type of super highways being built throughout Germany. Ostensibly these highways were being built as a part of the so-called Nazi re-employment program. Actually they were built under the direction of Fritz Todt, who was an officer in the German Air Force during World War I and was closely associated with Marshal Goering. They were designed as a direct contribution to Germany’s economic war potential during the years preceding the actual hostilities on their home soil. After the conflict reached Germany, these very same highways directly supported the military efforts of the German Army in defense of their homeland.
The large amounts of petroleum used in a war effort puts a strain on transportation facilities. The more common methods of transporting this commodity are by tank cars and tankers at sea. Our own country suffered the acute shortage of gasoline during World War II not so much from the lack of gasoline as from the lack of transportation facilities. Pipelines must be considered a transportation facility in the evaluation of transportation potential. A system of pipelines alleviates the employment of tank cars or tankers over those routes covered by the pipelines. Also within the realm of this potential is the ability of shifting the load of transporting petroleum from tankers at sea to land facilities. Many nations transport all fuel oil by land. If an economy depends on the sea, this must be considered a part of the transportation potential.
The economic war potential of a nation must include its merchant marine. The total number of ships and the ability to build ships will govern the extent of military actions that the nation can engage in. A predominantly land power with little or no merchant marine cannot embark on invasion scale amphibious operations until the necessary shipping has been produced. Another aspect of shipping which must be considered is the navigable river and inland canal network. These, coupled with the number of barges and the capacity of the rivers and canals, are all important factors in the transportation potential of a country.
The foregoing discussion has presented those factors behind economic war potential; and a potential war machine, given the time and the man power, is the one which can produce the real resources for war. These are, as opposed to the potential resources, the army, navy, and air force with their transportation, tanks, artillery, bombers, fighter planes, and warships. This equipment must be immediately available for operations, since an existing war machine is the only one capable of initiating or resisting attack. The quality and quantity of real resources for war will depend on the industrial machine that produces the equipment. This is in turn based on the economic war potential the nation possesses, and the skill and foresight of the national leaders in forming the war instrument. During the years of peace small armies and navies are the rule. All efforts are directed towards increasing the standard of living in the civilian economy. An economy possessing the necessary resources and industrial plants for the production of commodities providing a high standard of living is the very same economy that is necessary to produce a war machine. The difference between the production of peacetime industry and an industrial program for war lies largely in the end use of products. Thus a nation committed to expanding production of machine tools must be judged by the use to which these tools are put. Are they for the purpose of making automobiles or tanks? Industrial deployment for war begins with preparations that originate long before the commencement of actual hostilities. A country which enjoys high volume production of civilian goods must stop this production and retool for the manufacture of the machines of war. Machine tools must be ordered long before any equipment is actually delivered. Employees are reduced during retooling and materials become critical, which are symptoms of the maladjustments of a transition period of industry. It is impossible to provide all the necessities immediately. Even nations under planned economy programs suffer from the unbalanced production that is characteristic during this rapid industrial expansion. Some industries receive all the needed materials while others receive little or no materials. This, in turn, interrupts normal industrial activity. As a result of these conditions one of the earliest indications of an expanding war production program is the commencement of, or a change in existing, priority policy. Inventory control measures are instituted to yield information on the levels of designated critical materials. The production of civilian durable goods becomes a thing of the past as all resources are devoted to the manufacture of the real materials for war. Economic life is thoroughly entangled with the making of war.
The importance of knowing the economic war potential of foreign governments may be illustrated with the case of Germany during the decade of the thirties. We have seen the importance of steel to an expanding war effort, but now let us analyze these figures in terms of governmental policies and events. Hitler came to power in March of 1933. From this date until the fall of France in June of 1940 the output of German steel continually advanced. All of this increased steel was not used for increasing the standard of living. During this period of increasing German economic war potential our own armed forces were suffering from the cycle of reduced budgets. Each further Nazi move was undertaken as the steel production continued to advance. Hindsight reveals now that the United States defense program would have been infinitely better if undertaken as these moves were accomplished. Evaluation of all the information on this production would yield valuable data on the background of the German government’s policies. At some time during this increased production the totalitarian ideology would endeavor to conquer the free people of the world. This is but one example, and is easier understood some ten years after the events occur. The preparations for war make a vast change in the employment of the physical resources of a nation. Thus another reliable index to be used in conjunction with steel data is the general index of production. From these developed patterns of economic war potential should stem the defense policies of the United States. By foreknowledge suitable plans may be made for dealing with the actual situations as they develop from day to day.
Economic war potential is thoroughly inter-woven in all phases of national existence. Strategy is controlled by this important asset of a nation. Beginning with the basic decision made by state leaders through the various echelons of command, economic war potential governs. Thus we find the decision to wage total warfare against an adversary is the beginning of economic war potential’s strategic significance. Tasks assigned from this basic decision invariably lead to the destruction of the enemy’s industrial might. The recent conflict yields many examples of strategic decisions reached as necessary to support operations aimed at the enemy’s production centers. The Strategic Air Forces of the United States and Great Britain put forth considerable effort in the destruction of German industry, rails, and strategic material resources. In the Pacific Theater of operations the importance of the Philippine Island Campaign of late 1944 was caused primarily by the need for stopping the movement of strategic resources, particularly petroleum, from the Netherlands East Indies Islands to the Japanese Empire. Physical objectives where land masses are encountered are derived on the basis of reaching the enemy’s centers of production and stopping this war production. To many unfamiliar with this concept, it may be hard to reconcile the landings on Iwo Jima, for example, as being associated with the stopping of Japan’s economic war potential. The decision had been reached to destroy the Japanese Industrial Economy and was being implemented by the submarines and by the bombers of the 20th Air Force Command. But here the obstacle was encountered of losing many bombers which could be saved if we possessed this tiny island of the Western Pacific. The importance of continuing the operations against Japanese industry in order to reduce her economic war potential required the assault, seizure, and occupancy of Iwo Jima. The purpose of this decision was to establish air bases to support the destruction of Japanese war industries.
Like strategy, our own logistic support for military operations is completely dominated by this nation’s economic war potential. No amphibious landing of invasion magnitude could be commenced until the necessary real resources for war were produced. Troops could not be transported to the overseas theaters until transports were built. The transports in turn were dependent on the erection of ship building industries, and back of this was the production of all the necessary materials needed to build both the ship yards and the ships. The economic war potential of the United States may be termed the production contribution to the field of logistics.
An estimated 8100 armed conflicts have been fought by mankind in his existence on the earth. In our present generation we have fought two major conflicts, one global in scope. Even today with the results of the great waste, the horrors and discomforts, to say nothing of the personal sorrows and sacrifices of the last war fresh in the memory of all people, the world is rent with conflict. Some of these are on the level of warfare but for the most part they are conflicts of ideologies. The basic, underlying, never varying tradition of this republic is insistence upon the worth and liberty of the individual. But, serious threats to the continued existence of liberty have not been eliminated. These come not only from the inevitable consequences of the war itself but also from the course that is being pursued by certain governments. Certainly during the decade of the 1940’s this country has devoted its supreme efforts toward the preservation of the liberty of nations and individuals. The result is that today we find a difference in world powers commonly called “the split of East and West.” Some nations are resorting to the use of the ideology as a disruptive force during which time they are preparing the industrial establishment for expanded production. The typical approach of nations with some types of ideologies envisages a softening up of a victim nation by a campaign of press, radio, psychological, secret diplomacy, propaganda, sabotage, treason, and internal disintegration until the nation’s state of mind has been calmly led into a false sense of security. Many examples of this method are illustrated by the German approach used during the thirties. We must recognize that various ideological enemies will pose as friends desirous of maintaining peace. When they have developed the necessary industrial potential to assure unlimited might, they will try to force their ideological aims on the established order of mankind.
In this era there are no restrictions on warfare. The speed of events and destructiveness of modern weapons leave little hope for time to prepare for a global triphibious war of the future. Many nations plan ahead during the days of peace for an actual war and precipitate the conflict by sudden attack aimed at accruing initial superiority. At present we are faced by nations openly committed to programs of aggressive expansion. A forced re-evaluation of our position in world affairs shows that in a future conflict of any magnitude we will not have an option of choosing war or peace. Someday we may be faced with an enemy that has developed its economic war potential to a point where it is equal to, or even superior to, the capacity of production we as a nation are capable of developing. The United States cannot and must not rest on its laurels of past successes. We must be prepared for any contingency of the future, including the knowledge that it exists. During the present period of world wide insecurity and fear, our statesmen must be guided by the true facts existing throughout the world.
The basic information needed by our leaders in handling situations should stem from the C.I.A. This data must include collection, analysis, and evaluation of the whole production program, the location and number of factories, amount and adequacy of raw materials, transportation and labor, priority methods and procedures and programs of industrial expansion for all nations of the world. An intelligence plan on economic war potential is in the field of strategic intelligence and is beyond the scope of an operational intelligence group. Enormous amounts of factual data are available that only need interpreting and evaluating without resorting to clandestine operations. For most countries throughout the world it is a matter of pride to present information on the production accomplishments of their industries. On the other hand, certain nations are not providing information of this nature. Where this condition is encountered, it is vital that a planned program be initiated to obtain the information. In many cases the resulting data will require the evaluation of what the nation concerned can do and not the positive information of what it is actually accomplishing in the way of production. Unfortunately budget limitations might be imposed on a program to provide world production information. It should go almost without mention that any monetary costs of a program of strategic intelligence would be dwarfed by the importance of the information derived from the program. We must not permit dollar consciousness to stop a need which is so vital to the welfare of the country. Foreign nations have complete access to all the records and facts concerning American industrial production. The cost is small to these governments for the information since it is so easily obtained. For this reason most countries are availing themselves of the opportunity to collect statistics on the economic war potential of the United States.
For us to begin a program of this nature we must make exhaustive studies of all countries’ economic and productive systems. Any activity executing a plan of strategic intelligence must have a clear comprehension of what factors determine the capacity for war production and their relative importance. The analysis of statistics should be the subject of close scrutiny to yield a long-run view of a nation. From this collection of data increasing or decreasing trends analyzed on the long term basis will show the capabilities of maintaining an extended war effort. Analists must be quick to note any changes in the production structure as shown by the differential rates of industrial expansion. Plant capacity is needed for any program of war production and any large scale plant expansion must be known, analyzed, and evaluated in view of the situation existing at the time. We must be particularly alert to detect this expansion during periods of strained relations. It may take one of two forms or both, the expansion of existing facilities or the building of new plants. Real threats to world peace will become apparent first through the increase of the industrial production facilities of the munitions establishment. The existing state of the munitions industry is of importance only in the tactical sense of obtaining an immediate objective and not one of long range significance. The evaluation of trends is what is important.
The Summary Report of the United States Strategic Bombardment Bombing Survey reported “in the field of strategic intelligence there was an important need for further and more accurate information especially before and during the war.” Prior to 1940 it was extremely difficult to find information on the location of industrial facilities in foreign countries in any one source. Duplication was rampant! If you were interested in the number of factories located in country “X,” you obtained the information from the State Department desk handling that country. On the other hand if you were interested in the number of factories producing given articles within a given country, it was necessary to obtain this information from the Department of Commerce. No central agency compiled the information, let alone evaluated the economic war potential. The passage of the National Security Act of 1947 ensures the evaluation and dissemination of information within the government. To this must be added the additional responsibility of knowing the capacity of nations to wage total war before they embark on global warfare. We must never again be permitted to find ourselves in the pitfall of not seeing the need for an adequate defense program.
In these times of peace we prepare for war; and in peace or war it is infinitely better to be prepared for those events that may never happen than to be caught without any plan for events that do occur. War is inevitable only if people fail to tolerate and respect ways of life that they cannot share. Through the medium of the United Nations men are striving to resolve their differences. Amid this step in the right direction we must assume that every important government is conducting the very same intelligence activities in this country. National policies must be selected by our leaders who comprehend the close relationships of politics, economics, ideologies, and military strategy before embarking on a position that invites attack by others, unless we are fully prepared to meet this attack. ECONOMIC WAR POTENTIAL is the weight in the balance of peace or war if war should ever again become imminent. The diplomatic rivalries rampant in the family of nations on the brink of armed conflict are guided by military policies based on the capacity of the industrial system of the country. Negotiations, warnings, and appeasement are not enough to restrain a nation bent on aggression. When a single situation has reached this stage, we must be extremely careful of the position our leaders take, as one such incident may be the spark that bursts into the flames of war—total war and total destruction. Sometime in the future we may again be faced with this test of our force in which it is essential that the widest possible discussion of strategic problems, conducted by our nation’s leaders, be aided and guided by strategic intelligence of the economic war potential of all world-powers or combinations that might endanger this nation’s security. The greatest asset we as a nation can have would be the assurance that C.I.A. is providing our national leaders and planners with strategic intelligence on the economic war potential of all foreign governments.
Commissioned from the University of Southern California Naval R.O.T.C. in 1943, Lieutenant Rowe participated in the Kwajalein, Saipan, and Peleliu actions while attached to the U.S.S. Maryland as a junior officer in C.I.C. and as a Gunnery Division Junior Officer. During the winter of 1945 he served as radio officer in the U.S.S. Philadelphia in the Atlantic Fleet, and subsequently, with transfer to the Regular Navy, he served as communications officer in the U.S.S. Duluth. At present he is instructing at the C.I.C. Team Training Center, Boston, Massachusetts.