Guns and Butter: The Pre‐Korean War Dispute Over Budget Allocations: Nourse's Conservative Keynesianism Loses Favor Against Keyserling's Economic Expansion Plan

. Focusing on the disagreement between Edwin Nourse and Leon Keyserling, two members of the first Council of Economic Advisers, the Truman Administration's gradual shift from Nourse's belief that a choice had to be made between “guns or butter” and Keyserling's claim that an expanding economy permitted large defense expenditures without sacrificing an increased standard of living is explained. In 1949, when Keyserling gained support from such presidential friends as Dean Acheson and Clark Clifford and persuaded the President, Nourse resigned as CEA Chairman, warning about the dangers of budget deficits and increased funding of “wasteful” defense costs. Keyserling succeeded to the chairmanship. He influenced Truman's Fair Deal proposals and the economic sections of National Security Council resolution 68 which, in April, 1950, as serted that the larger armed forces America needed would not affect living standards or risk the “transformation of the free character of our economy.”