A: Very great gloom, yes. And there were of course...

(instruction)

A: Well all of us in Washington thought this racing attack by the North Koreans down into South Korea was a very dangerous development. We didn't see how this was going to be stopped. Our forces were retreating rapidly down to a little point of land at the very tip of Korea. We thought that maybe they could hold out for a few days or weeks there in that little tip, but that we couldn't see how they could really be driven back in, way back, and were surprised by General MacArthur's sudden very successful landing in Inchon and its vast success, it was, seemed to us to be a miracle so that I had not been a great admirer of MacArthur, I thought he was vain and arrogant. I'd spent a lot of time with him and he'd asked me come and work for him, but I found that not possible because He made it clear that nobody working for him was going to be authorized to have any contact with Washington at all because he considered everybody in Washington, the Government, were all traitors. So that there was a kind of poisonous atmosphere.

A: He considered that the President and everybody around the President were in fact traitors to the United States, and he was unambiguous in his thought of that. He thought they should have reacted earlier and more forcibly and done a lot of things dithan they did do, and so he could not abide them. And when he asked me to help him, he wanted me to run the South Korean economy for him, and said, "Well in order to that I, I can't do it one, jumyself, I've got to have a team." And he said, "Well that's all right but what kind of a team do you want?" And I said, "Well I want to have at least one member of the team back in Washington to keep me advised as to what the policy developments, the economic policy developments with respect to the Far East are in Washington as we've got make our economic program compatible with American policy with respect to the Far East. And I can't do that unless I can have somebody there who can keep me alert as to what's going on, what's about to happen, otherwise I'll make big mistakes." And MacArthur said, "They're all a bunch of traitors and I won't have anybody on my staff have anything to do with anybody in Washington." So I told him, "Well thank you very much for having given me this offer but I think I cannot do it."

A: Well Truman didn't like to quarrel with his generals. He was somewhat timid about it. He didn't feel great confidence in his training and abilities with respect to the conduct of high policy and particularly military policy. He was a little shy in that regard. So that MacArthur gave him a real problem, I thought too much of a problem. I thought if, what he ought to do is to just lay down the law, and tell MacArthur that this is what we're going to do and this is what we're not going to do, and not argue with him. But that wasn't Truman's approach and so he wanted to talk to MacArthur. And the secretary who kept all the minutes of that discussion happened to be my secretary. She was roped in for this job and so she told me, so I was one of the few people who know exactly what had gone on in that discussion. I forget her name now, she was a great girl.

A: Truman was timid, wanted MacArthur to just say that he was going to support whatever the Presidential decisions were, but that wasn't MacArthur's style. He didn't want to support the President at all, and made it clear that he didn't want to support him and wasn't going to support him and that he thought he, MacArthur, would be a better President than Truman was. And might consider running for the Presidency himself.

A: I thought Truman acted slowly and didn't sack him soon enough. But we did break the codes of a number of countries and in particular the Spanish and the Portuguese and so we were reading their messages that came back from Tokyo describing their conversations with MacArthur, and for some reason or other he was very fond of the Portuguese and Spanish Ambassadors and was very frank with them. And from his, from listening in on his discussion with them as they reported it back it was pretty clear what kind of a man he was and what he had in mind, and it wasn't good. So from that we, we really knew pretty well that he was disloyal to the President, tended to be disloyal, and intended to run for Presidency himself.

A: Well he'd done what he wanted to do with the Inchon landing which was a complete success, and so the question at issue was how far north did he want to go, and he certainly wanted to go up to the Yalu. And he didn't take seriously the threats that the Chinese might intervene. What's more he hoped that they might intervene, and that that would give us an opportunity to go to war with the Chinese whom he hated. And frankly I suspected that MacArthur and certainly some of his associates, I forget their names now, had bought real estate in Hong Kong or various other places the value of which would be, would be greatly enhanced if the Chi-Comms were defeated and the Chi-Nats were in power. So I thought some of them were acting venally. I forget now the names of the ones that I was pretty sure were in this camp.

A: I think he had in mind that one could cut of reinforcements from the main part of Russia to the Far East by dropping nuclear weapons on the Trans-Siberian railroad. And very few people knew what our nuclear stockpile was at that time, and I was one of the few who did know, and we didn't have many. And I think MacArthur thought that one or two nuclear weapons could so disrupt reinforcements from the, from Moscow region to Siberia that they couldn't reinforce positions out there, which was quite wrong and we didn't have the weapons, we wouldn't have used 'em, they wouldn't have been effective: the whole thing was a miserable error. But I think that's what MacArthur had in mind.

(intervention)

A: Well after we used the two weapons at Hiroshima and Nagasaki we didn't have any more. And it would have taken us at least a year and probably two years to put together an additional nuclear weapon. And that was the most highly classified secret there was in the United States. I think there were only three people in the US Government who knew that fact. For some reason I was one of the three. There's Colonel Loper who was the secretary to the Atomic Energy Commission, was number two, and I think the President was number three.

A: That's exactly what I'm saying, and that was the most highly classified and should have been the most highly classified fact around in those days.

A: I think at least two years.

A: I think so.

A: Of course by that time we made too many, but that's a different matter.

A: It's my recollection that it was enormous stimulus to the US economy as a whole because of the demands for all kinds of goods that the military needed. So that one industry after another found a huge demand for its product and prices were rising, and so the profits of industry were very great indeed, so there was a feeling of great well being amongst the American business community. For those of us who were interested in the long run stability of the US dollar, now that was a serious problem: how do you overcome the inflationary aspects of this situation? And there was a, a chairman of the President's Board of Economic Advisers, was a very intelligent fellow, I forget his name now, no I can't recall it at the moment, and I talked to him about these problems and he and I agreed entirely that there wasn't any danger that the US economy would break down in the sense of not being able to produce; the problem was one of putting in a lot of inflationary drive into the situation and it was that inflationary drive which we ought to try to counteract if we could, if we could figure out the right way to do that. So we tried and to our minds the ideal way of doing it would have been to have had an additional series of taxes which would have taxed away an amount equivalent to this surplus that we were spending at such an outrageous rate.