Memoirs of the anti-Communist banker who founded the commercial nuclear power industry

 

The years immediately following the end of World War II were marked by two important realities: the beginning of the Cold War with the Soviet Union — the Truman Doctrine was announced in 1947 —and the advent of the atomic age. At the intersection of nuclear warfare and atoms for peace stood Lewis Strauss…

This precarious environment is where nuclear power production was born. But its destiny was not set in stone. Would the peaceful application of atomic energy towards power production be controlled publicly —by the government, as it was in Great Britain and Communist Russia — or privately?

While the answer is obvious to us today in retrospect, this was no easy decision at the time. There were powerful proponents on both sides. Nationalization had a lot of momentum following FDR’s long stint at the helm of the Presidency, which gave way to general public acceptance of his unprecedented Federal intrusion into the economy.

For example, a month after coming into office, he issued an Executive Order to confiscate the gold of private citizens in order to remove restraints on the Federal Reserve so that it could expand the monetary supply (inflate) in an attempt to stimulate the economy. A month after that, Congress passed, and Roosevelt signed, the Tennessee Valley Authority Act, which was consistent with statements antagonistic to private utilities that Roosevelt had made during his campaign speeches.

The first chairman appointed to the brand new Atomic Energy Commission — formed out of the Atomic Energy Act of 1946 — by President Truman was David Lilienthal. Lilienthal had been the leader of the TVA since the early days of the New Deal, having become known as “Mr. TVA” and “The Father of Public Power.” He served on the commission until his resignation in 1950. The Atomic Energy Act wouldn’t be revised to allow commercial participation in atomic energy until 1954, but the TVA had lots of friends in government, as Lewis Strauss discovered during the Dixon-Yates fiasco. Senator Clinton P. Anderson, from New Mexico, had made his way into national politics through New Deal programs in New Mexico. In 1956, Anderson was ready for the government to spend $400 million on six demonstration nuclear reactors, which Strauss helped squash. [319]

SUMMARIZING STRAUSS’S CAREER

So who is Lewis Strauss? While hardly a household name today, anyone interested in the history of the nuclear power industry should be interested in Strauss’s story. He was the AEC chairman who helped relax the laws that restricted private industry from participating in commercial nuclear power generation.

The Atomic Energy Commission was the predecessor of the Nuclear Regulatory Commission. Lewis Strauss was one of the original five AEC commissioners from 1947 to 1950, became its third chairman in 1953 until 1958, and was, from the beginning, a key player in US atomic energy policy.

He pushed for nuclear bomb detection to monitor the Soviets, drove the development of the hydrogen bomb, and then championed the cause of a private nuclear power industry over a public one.

After Congress amended the Act in 1954, Strauss inaugurated the commercial nuclear power industry by urging private companies to develop the first nuclear plants. He organized the development of Shippingport Atomic Power Station, the first nuclear electric power plant built for peaceful purposes, as a demonstration of the technology’s commercial viability. It was a 60-MW pressurized water reactor constructed in 32 months that began generating power in 1957. Under his chairmanship, the commercial nuclear power industry grew from two experimental plants in 1953 to eight commercial plants in operation or under construction by 1958. [324-325]

Strauss went on to serve as the US Secretary of Commerce from 1958 until 1959 as an interim appointment under Eisenhower, but, under the influence of Clinton P. Anderson, his confirmation bid failed. That ended his government career.

Shortly after this dramatic incident occurred, he penned his memoirs and published them under the title Men and Decisions (1962). He was a well known public figure at the time, and his book became a New York Times bestseller.

The book totals 430 pages excluding the endnotes and appendix. Eleven of the 19 chapters are devoted to atomic energy topics. It spans over 60 years of history, competently balancing breadth and depth.

Strauss illuminates some of the inner workings of the less visible levels of government he dealt with in formulating early US atomic energy policy. At the same time, he incorporates some interesting side stories that revive otherwise long forgotten, yet nevertheless important, moments in history. With just a couple of exceptions, Strauss’s short chapters make for swift reading.

Strauss generally writes to elucidate the layman. His warm, classy writing style invites the reader in and welcomes him, making him feel as if he were reading personal letters written to him from a trusted friend. For this reason, Strauss’s book is engaging even though many of the historical circumstances related in it will be foreign if not forgotten to most modern readers.

The reader will pick up a broad, general knowledge about the history of US nuclear energy development, though just a few, but critical, revelations into how Strauss’s personal beliefs may have played a direct role in his own decisions.

In a letter he addressed to President Truman in which he urged Truman to proceed with the development of the “super,” as the hydrogen bomb was called, he said that (referring to the Soviets): “A government of atheists is not likely to be dissuaded from producing the weapon on ‘moral’ grounds.” [220]

The last two pages end with a rather articulate discussion on the age-old religious debate between free will and fate, human responsibility and God’s predestination. [429-430] He speaks of the debates between the Saducees and Pharisees, and, though Jewish, between Augustine and Pelagius, and between the Calvinists and Arminians. These are debates familiar to studied theologians, but not as well known among the general population. He speaks hardly at all of his religious beliefs throughout his text, though he sprinkles appropriate Bible verses into several epigraphs. He admits on the final page that these issues are what made him “deeply interested in the process of decision-making for fifty years.”

He did name his book, afterall, Men and Decisions.

UNWAVERING CHARACTER

Upon conception, the AEC had one purpose: to make bombs. As many of them as possible, which were to be placed at the President’s disposal. The legislation locked out private industry from gaining the knowledge of the atom that the government had developed over the course of the Manhattan Project.

The other primary concern of the commission was security. The threat of Communist spies infiltrating the American government to steal its secrets was real, as the Alger Hiss affair revealed in 1950. Hiss had joined FDR’s administration with the New Deal and rose up high in his State Department, helping to establish the United Nations. Whittaker Chambers had actually issued warnings about Soviet spies as early as 1939, but FDR wasn’t interested in hearing them.

Strauss notes that a majority of the Commission’s time and resources were devoted to personnel security. In the first seven years, half a million security clearance requests were evaluated. Strauss reported that 1 percent of these individuals were “suspect,” and about four thousand were outright denied, resigned, or cancelled their request. [259]

Strauss was quickly labeled as a security freak. He saw the battle with Communism as fundamentally religious: good versus evil. Therefore, he took the spirit and letter of the law seriously. He was not in the majority. He was mocked in public by Robert Oppenheimer over an incident with Norway in 1949. Section 10 of the Atomic Energy Act prohibited the “exchange of information with other nations with respect to the use of atomic energy for industry purposes.” [256] Strauss discovered that we had shipped, upon their request, a radioactive isotope of iron to Norway’s government for, most-likely, military purposes. He felt this was a clear violation of the law, so he registered his complaint.

Oppenheimer mocked Strauss in a public hearing a few days later. In an attempt to denigrate the letter of the law, Oppenheimer quipped that these isotopes were less important than electronic devices, but more important than vitamins. His remarks drew laughter from Congress and reporters.

Strauss was later vindicated in 1953, however, when the Norwegian government fired the individual who had ordered the isotope because they discovered he had been working for the Communists. This series of events led to Oppenheimer’s downfall. Strauss also later learned that Oppenheimer had been against the atmospheric detection program. In a series of circumstances that came to a head in 1953, as Strauss recounts in Chapter 14, Oppenheimer’s security clearance was ultimately revoked in 1954 after Strauss had assumed Chairmanship of the AEC under Eisenhower.

Oppenheimer was found guilty of lying under oath and associating with Communists, which violated two of the government’s three screening criteria: character, associations, and loyalty.

It was Strauss who pushed for a nuclear detection system that would monitor radioactivity in the atmosphere. He did this in April of 1947, as soon as he came into office at the inception of the AEC under Truman [201]. He raised the issue to Chairman Lilienthal, Lilienthal gave him the responsibility to pursue it, and in September of 1949, just two years later, we detected the Soviet’s first nuclear detonation. [205] He fought skepticism in Congress, who wanted to spend the money elsewhere. He fought skepticism from foreign policy experts who thought “that it would be a waste of time, personnel, and money.” [202]

EARLY YEARS AND FINANCIAL SUCCESS

Born in 1896, Strauss had a colorful career. Starting at age 16 until he turned 20, he was a shoe salesman for his father. He first learned of Herbert Hoover through the publicity generated by Hoover’s Belgium relief program.

Strauss’s mother joined thousands of other women in sending warm clothing and blankets to Hoover to help the occupied French and Belgian people. [5] By the time he was 20, Strauss had saved enough money to volunteer without pay for Hoover’s staff in the US Food Administration in 1917, where he became fast friends and a trusted personal secretary to Hoover. For the remainder of the First World War Strauss was involved in diplomatic efforts and made many important contacts. He mentions the names of several men, most of which will likely be foreign to modern readers: Raymond Fosdick, Elihu Root, Jean Monnet. When the war ended, Strauss was invited to join the staff of the League of Nations, but turned it down to accept a position with the powerful New York banking firm Kuhn, Loeb and Company. [49-51]

For two decades Strauss worked with the firm, being promoted to partner and marrying one of the boss’ daughters. Important senior partner Paul Warburg had left the company shortly before Strauss arrived to become one of the first governors of the Federal Reserve System and had himself “written the fundamental charter for that institution.” [84] Strauss developed a “close working relationship” with Paul’s brother Felix in the field of philanthropy, such as by serving on the American Jewish Joint Distribution Committee which Felix had founded in 1914. [84]

Strauss recounts some of his interesting business successes from investing in certain inventors. He decided to make investment loans to Mannes and Godowsky who developed a new, innovative colorized film that became Kodachrome. The film was sold from 1935 until it was discontinued in 2009, when digital photography finally overtook the traditional film industry. He also invested in Edwin H. Land, an inventor who founded the Polaroid company. Finally, he played a key role in getting Walter P. Chrysler fired from Willys-Overland Motor Company who, afterward, and using his generous severance package, founded the Chrysler Corporation in Detroit. Strauss then supplies a short reflection on his career in the banking sector and how he had to resign in order to accept his position with the AEC. He denies that he regretted the sacrificed income because “there is satisfaction of a unique kind in public service.” [102]

FINANCIAL FREEDOM AND PHYSICS

It is apparent from his stories that Strauss amassed a fortune while working at Kuhn, Loeb. For example, because of his long-term interest in physics, coupled with his parents’ death from cancer that made him “aware of the inadequate supply of radium for the treatment of cancer in American hospitals,” [163] he decided to fund scientific research into atomic physics for his physicist friends at Cal Tech. He did this in hopes of discovering how to produce more radium. The university regularly billed him for expenses “with the exception of salaries, which I paid directly.” [169]

In another example, Strauss tells of the decision to build a revolutionary device for detecting the detonation of nuclear weapons from anywhere in the world. Strauss, an AEC commissioner at the time, personally and passionately pressed the military to initiate this project. At one point, he agreed to assume personal liability for $1 million in government contracts when, over the New Year weekend when the AEC commissioners were away on personal leave, a funding crisis arose and threatened to stall the project. [204] That’s a sum of $10 million in 2015 dollars.

Because of his deeply personal interest in atomic physics and its promise of transmuting cancer-fighting radioactive isotopes, Strauss became friends with several prominent physicists of the day. One of the most important was his close friend, Dr. Leo Szilard, the man who, along with Albert Einstein, wrote an important letter to President Roosevelt that led to the creation of the Manhattan Project. When uranium fission was discovered in 1939, Strauss was friends with the men who first realized its explosive, deadly potential.

These connections served as his entry into the nuclear power industry. Strauss also served with the Naval reserves beginning in 1925 and was called into service in March of 1941. He was promoted to rear admiral during World War II, and he speaks of his service in Chapter 8.

CONSERVATIVE POLITICS

Strauss was a conservative before there was even a conservative movement. Senator Robert Taft was one of his closest friends, if not his best. [332, 335] Taft battled against Eisenhower for the Republican nomination in 1952, and Strauss wrote that he was with him on the night of his defeat. Taft opposed FDR’s New Deal policies and was a non-interventionist. He was one of the last of the “Old Right.” It would be three years before William F. Buckley founded National Review, which was much more interventionist — the “New Right,” represented by Barry Goldwater.

Following the war, Strauss was an adamant proponent of atomic weapons development and testing. There was widespread skepticism that the Russians could develop a nuclear bomb quickly, so there was great surprise and further skepticism when a Russian detonation was detected so soon after the end of World War II (thanks to the detection device Strauss pressed for). His decision to build a detector directly led to the development of thermonuclear warheads (hydrogen bombs) out of fear that Russia might get there first and force us to “compromise, appease, surrender or fight.” [207]

Strauss was an anti-Communist, and his hard-nose stance on enforcing strict AEC security measures led to the Oppenheimer affair. The public and the media favored Oppenheimer, but Strauss viewed Oppenheimer as a security liability and possible Communist. This made him politically unpopular at the time. He was also a forceful proponent of the government contract that erupted into the “Dixon-Yates” fiasco. He favored the development of a private power industry over a government controlled one (TVA being the model), and he believed Dixon-Yates would help bring this about.

PARTISAN AND CONFIDENT

According to old stories accessible on the Internet, Strauss was known to be arrogant and unwilling to compromise. Against the “go along to get along” mentality and bipartisan compromise that the public is generally used to seeing come out of Washington, Strauss’ strong-headed demeanor culminated in the explosive 1959 Senate hearings that resulted in the Senate refusing to confirm his appointment to Secretary of Commerce under President Eisenhower. He was only the 8th such case in the history of the nation to that point.

One historian concluded that Strauss violated one of the tenants of the unwritten code of Senate behavior: courtesy. For example, the chair of the Senate’s Joint Atomic Energy committee was Clinton P. Anderson, Senator from New Mexico. Anderson was a New-Deal man and is known for the Price-Anderson Nuclear Industries Indemnity Act. He accused Strauss of keeping too many secrets from Congress, to which Strauss replied that Senator Anderson’s accusations came from “a limited understanding of what is involved.”

The Senator took this as a personal attack against his intellect, and the Senator consequently became the representative foe to Strauss in the Senate hearings and played a large role in turning the tide of support against him. His defeat by the Senate ended his public career.

DECISIONS EVALUATED

Strauss explains that the intent of his book is less autobiographical and more concerned with describing the men he worked with “in business and in government,” the decisions they made, and how they impacted the world. He also intended to document his own decisions faithfully for the historical record “without the palliative or the editing of hindsight.” [viii] He writes that he “hopes for tolerance” in instances where the historical record proves him wrong. Since the book was published in 1962, surveying the half-century since should allow us to evaluate how history has judged him.

In the battle for who should own the power industry, private industry or government, Strauss came down on the side of the victors. There were 99 operating nuclear power reactors in 2017, and most are owned by private companies.

Regarding his Cold War-era decisions to be the first to develop the thermonuclear bomb against Russia, it seems he probably made the right move. The arms race eventually led to the policy of mutual assured destruction (MAD) in which the private citizens were held captive by rival nations. While certainly not a favorable situation, and one which brought us to the brink of nuclear holocaust a few times, the Soviet Union eventually went bankrupt. Communism demonstrated its failure by central planners to properly allocate scarce economic resources, compared to the free market system operating in the United States. It took time to arrive at that point, however — 41 years after Truman announced his decision in 1950 [224], to be exact — and maybe the US development of the hydrogen bomb deterred Soviet aggression and helped buy us the time to get there.

Strauss believed in continual refinement of atomic weapons to use them as defensive measures and even industrious ones, such as for mining and oil drilling. This required continual testing, and for this he was criticized. His hope in this area has not come to fruition, as we don’t use small nuclear explosives for mining purposes.

In an anecdote about the creation of an arbitrary unit of measure called the “barn,” Strauss revealed the depth of infiltration by Communist agents into the American program. That unit of measure is standard today, but it was devised when Manhattan Project scientists were describing the ease with which some atoms could stop neutrons and “compared the process with the ease of hitting a barn.” This is an American idiom, and yet we were surprised to discover, Strauss recounts, that the Russians, amazingly, had independently decided to use the same term to measure the same phenomenon. The closest word in Russian means “mutton.”

The Communists did infiltrate the US government. Strauss was correct in retrospect, and he was also proven correct a couple times while he was in office.

CONCLUSION

Strauss’s book is a good read.

It’s an easy read.

He’s probably kinder to his own actions than other observers were, but to be fair he extends this same kindness to the villains. By the time Strauss’s career ended, he apparently had few friends in the media. However, he stood by his ideals. He was unafraid to judge men and their decisions based on his black-and-white view of the world: good vs. evil, capitalism vs. socialism, the religious United States vs. the atheistic Soviet Union.

He believed in free market capitalism over Communism. He was not a complete libertarian, but he definitely did not subscribe to the New Deal philosophy. His memoirs reveal that he was passionate about getting private industry involved in commercial nuclear power production. Against the pressures of government control over power production, it was probably Strauss’s passion above all else that drove the birth of the industry as we have it today.

One response to “Memoirs of the anti-Communist banker who founded the commercial nuclear power industry

  1. “Those who do not study history are doomed to repeat it,” someone once said and historians tend to agree.

    As a related aside, I have learned from one of its docents that the Oak Ridge Lab and history museum is slated to be shut down at the end of 2017 since the D.O.E. no longer wishes to be in the museum business. gpw

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