On 13 May 1948, a dramatic conference took place at the White House. Ever since the communists had seized power in Czechoslovakia in March 1948, a war scare had gripped Washington. President Harry S. Truman had already agreed to add more than $3 billion to the Pentagon's fiscal 1949 budget, raising it to $13 billion, but the Joint Chiefs of Staff (JCS) and the military services were demanding much higher sums for the following years. Now the president had had enough. Supported by Budget Director James E. Webb, Truman flatly told Secretary of Defense James V. Forrestal that he was putting a $14.4 billion ceiling (excluding stockpiling) on the fiscal 1950 defense budget.

As Truman explained to Forrestal, “Military strength is dependent on a strong economic system and a strong industrial and productive capacity.” Before considering higher defense budgets, “the effect on our national economy must be weighed.” Increased military expenditures could bring runaway inflation, taxes, and deficit spending. In fact, unless “world conditions deteriorate and tensions increase,” the president intended to cut the Pentagon budget.

Truman's showdown with Forrestal over the defense budget poses interesting questions about the origins of the cold war. Some of the most decisive battles of the postwar era were fought not along the iron curtain but along the Potomac. The combatants consisted of contending factions within the U.S. government, each with differing ideas about how best to achieve the national security and world peace.