Throughout the 1930s, corporate liberals had devoted themselves to problems related to the Great Depression. Returning stability and profitability to the national economy, reemployment, social security, taxation, and reorganization of government ranked highest among their interests. Even before the corporate liberals’ job was done, however, events abroad nagged at them and increasingly captured their attention, time, and energy. After July 1939, their focus gradually shifted from depression at home to war in Asia and Europe. Many corporate liberals, including Edward Stettinius, Robert Wood, and Averell Harriman, changed positions in government,moving from domestic agencies concerned with employment, income, and welfare matters, to defense-preparedness bodies.

The march of totalitarianism was responsible for this transition. Corporate liberals watched—uneasily at first, then with growing dismay— as militarist and fascist regimes victimized weak neighbors. Japan invaded Manchuria, establishing the puppet state of Manchukuo in 1931, and later attacked adjoining areas of northern China. Italy took over Ethiopia in 1935, as Benito Mussolini's planes and tanks wreaked havoc on tribal warriors. Under Adolf Hitler, Nazi Germany repudiated the Versailles Treaty, remilitarized the Rhineland, engineered the Anschluss, and swallowed Czechoslovakia by March 1939. People in the United States, including the corporate liberals, fretted about fighting in Asia, the prospect of European war, and the unappetizing possibility of U.S. involvement. In this uncertain, dangerous environment, the decrepit state of American national defense provoked substantial adverse comment, and the call went out to fix it.

Corporate liberals knew that the United States was unprepared to meet the challenges posed by an increasingly unfriendly world. From their vantage point, three interrelated factors stood out most prominently. First, and most obvious, the U.S. military establishment suffered from disorganization and an appalling shortage of arms and munitions. The country lacked the equipment, particularly the weapons, with which to fight. Second, the federal government operated only a very small and inefficient arsenal. This pitiful munitions establishment could supply no more than a fraction of the guns, ammunition, ships, planes, and other implements necessary for national security. Finally,American industry was not well equipped to take up the burden of defense production. Twenty years of peace, with little opportunity to turn a profit, had rendered the private munitions industry nearly defunct.