Defense Production Act Institutionalizes Korean War Industrial Mobilization, Defense Budget Quadruples to $50 Billion

President Harry S. Truman signs the Defense Production Act in response to the Korean War, enacting sweeping federal authority over industrial mobilization and war production. The legislation enables Truman to establish the Office of Defense Mobilization, institute wage and price controls, strictly regulate heavy industries including steel and mining, prioritize and allocate scarce industrial materials, and order dispersal of wartime manufacturing plants across the nation. The Korean War triggers a massive defense spending explosion, with the military budget surging from a postwar low of $13.5 billion to $50 billion by December 1950. This quadrupling of defense expenditures represents 14 percent of gross domestic product and pumps unprecedented resources into corporate defense contractors through government procurement.

The Defense Production Act creates permanent infrastructure and bureaucracy linking corporate America to military spending, institutionalizing relationships that persist beyond the Korean War emergency. Companies including Boeing, Lockheed, General Electric, Northrop Grumman, Raytheon, and Electric Boat expand their operations and workforces dramatically to meet defense demands, becoming structurally dependent on military contracts. By November 1950, after Chinese forces enter the war, inflation soars to 7.9 percent as defense mobilization strains the economy. The U.S. economy proves strong enough to afford such massive expenditures while simultaneously building and maintaining military bases domestically and globally, establishing the economic foundation for permanent overseas military presence.

The Korean War “jump-starts the link between business and the government that President Dwight D. Eisenhower called the ‘military-industrial complex,’” as historians note. The emergency mobilization transforms temporary wartime relationships into permanent structural arrangements. Defense contractors grow “huge and prosperous” while employing tens of thousands of workers whose livelihoods become dependent on sustained military spending. The Defense Production Act remains on the books and is repeatedly renewed and invoked during subsequent conflicts and emergencies, providing legal authority for ongoing government direction of industrial production for military purposes. This institutional architecture ensures that major corporations maintain permanent defense contracting operations, creating powerful lobbying interests for sustained military budgets, new weapons programs, and interventionist foreign policies that generate ongoing demand for their products.