cross-posted from Afflict the Comfortable
by Bob Buzzanco
Tet was a pivot point of the Vietnam War, and it’s been misrepresented ever since……
At the end of January the media will commemorate one of the more important and decisive events of the Vietnam War, the Tet Offensive. On January 30th, 1968 the combined enemy forces of the Viet Cong, the People’s Liberation Armed Forces in the South, and the People’s Army of Vietnam from the North attacked virtually every center of military and political importance in the Republic of Vietnam, even invading the U.S. Embassy grounds. Within sixty days, President Lyndon Johnson would reject a request for a massive reinforcement of troops to Vietnam, begin to de-escalate the war, and withdraw from the 1968 presidential campaign. Tet was as determinative as any event in the Vietnam era and has maintained near-mythic status since.
The consensus, still, is that Tet was in fact a great military victory for the United States but it was derailed by political factors at home, especially the media, symbolized by Walter Cronkite who famously spoke to America on February 27th, 1968 imploring Johnson to negotiate a way out of the war. While the enemy did suffer huge losses in 1968 (particularly in the so-called Tet II and Tet III offensives later that year), the reality was that grave American vulnerability had indeed been exposed and the U.S. could not expect future success, and there were people with more influence than Cronkite saying that.
American military officials, in their reports to their commanders and to the White House, were candid and pessimistic about the war in the aftermath of the enemy’s audacious offensive. In fact, for some time, senior officers had expressed misgivings about the war and warned that things were getting worse. They pointed out that the ally in the South lacked broad public support, the enemy was more integrated into local populations, and that U.S. soldiers were not well-suited for a war in Vietnam. Even U.S. Commander General William Westmoreland warned in early 1965 that sending ground troops to Vietnam would “at best buy time” and lead to more reinforcements “until, like the French, we would be occupying an essentially hostile foreign country.”
The Marine Commandant Wallace Greene attacked the U.S. strategy of attrition, comparing it to a “grindstone” turned by the enemy as the Communists had enough manpower to keep the stone going, even while suffering big casualty rates. Army Chief of Staff Harold K. Johnson thought likewise and commissioned his staff to prepare a study, the so-called PROVN Report, to suggest a shift from a strategy of attrition, search-and-destroy operations, and free-fire zones, among other tactics, to one of pacification, political warfare, and a de-emphasis on conventional military operations.
With this anxiety over the war already established, Tet hit the military hard, and despite public claims of success—Westmoreland had famously predicted “light at the end of the tunnel” in November 1967—the offensive reinforced many of its bleak views.
“Light At The End Of The Tunnel”
Throughout the Tet crisis, military officials in Washington and Saigon recognized America’s perhaps-intractable dilemma in Vietnam. At the outset, Westmoreland reported that, “from a realistic point of view, we must accept the fact that the enemy has dealt [South Vietnam] a severe blow,” bringing the war to the people, inflicting heavy casualties and damage, and disrupting the economy. President Johnson, alarmed by the reports coming from the military in Saigon, media criticism, and the largest casualty counts of the war, dispatched Chairman of the Joint Chiefs of Staff Earle Wheeler to Saigon at the end of February to assess things.
Wheeler claimed the media was unduly alarmist, but his report, presented to the president on the same day as Cronkite’s televised special, recognized and admitted the grave problems post-Tet. The enemy was strong and capable of continuing its attacks; the southern Army meanwhile had lost about one-quarter of its strength; the pacification program had been badly undermined; and the Vietnamese government was in peril as it confronted massive problems such as desertions, refugees, and reconstruction. “In short,” Wheeler concluded, “it was a very near thing.” Harold K. Johnson did not resort to euphemism. “We suffered a loss,” he cabled Westmoreland, “there can be no doubt about it.” Wheeler nonetheless requested another 206,000 troops for Vietnam and the activation of 280,000 reservists, and immense escalation that Johnson was sure to reject.
Clearly then, later claims that Tet was a great victory are essentially moot; American leaders in early 1968 did not have time for the dust to settle in Vietnam for a different analysis of the situation, and the enemy’s losses from the “mini-Tets” had not occurred yet. With a barrage of candid and often bleak reports pelting Washington from Saigon, policymakers could do little more than seek an effective way to cut their losses in Vietnam.
Execution in Saigon
And so they did. In early March, Clark Clifford, who had just replaced Robert McNamara at the Pentagon, would reassess the war; Johnson’s informal advisors, the so-called Wise Men, would finally urge de-escalation and the president lamented that “everybody is recommending surrender.” So on March 31st he announced a partial bombing halt and announced he would not run for reelection. While the war continued, and certain elements—the air war and expansion into Cambodia and Laos—intensified, it was clear that the huge troop commitment and the ground war had to be drawn down, and soon. By early 1971, under the post-Tet “Vietnamization” doctrine taken up by Richard Nixon, less than 150,000 troops remained in country. Euphemism and politically-motived analyses notwithstanding, it was clear the United States had lost the Vietnam War.
But there was another factor, distinct from the battlegrounds of Vietnam, in the recognition that the war had not been successful and disengagement had to begin, and that took place not on the battlefields of Vietnam but in banking houses on Wall Street and in the central banks of Europe. The economic consequences of the war have been largely neglected in most studies of Vietnam, but the costs and impact of a huge commitment to Indochina were always a pressing issue, and problem—never more so than during Tet 1968. While the American ruling class was clearly committed to the post-World War II imperial mission, it was also aware of the limits of economic hegemony and the damage being done by the Vietnam War on its longer-term global project.
Throughout the 1960s, American officials confronted a serious Balance-of-Payments [BOP] deficit, an ever-increasing gap between the amount of U.S. dollars going abroad—as investment, tourism, and of course military spending—and money coming in. Naturally that deficit grew dramatically as the involvement in Vietnam expanded, thereby heating up an already roaring economy, and eventually led to a run of American gold reserves. In 1944, the United States had created the so-called Bretton Woods system, establishing the dollar as an international currency fully convertible and backed by gold, so the intimate relationship between BOP deficits and the gold supply was vital to economic stability. By 1960, outgoing President Dwight Eisenhower stressed the “grave situation with regard to the outflow of gold” and feared “no one really understands what to do about it.”
By 1965-1966 the war was visibly destabilizing global economies. At home, the payments deficits grew as spending on the war approached $25 billion or more yearly. Gold stocks fell from $23 billion in 1957 to $16 billion in 1962, and remained in decline after that. Because foreign central banks could not adjust their currencies—Bretton Woods demanded fixed rates pegged to the dollar—their traders and consumers were paying higher prices for American goods because of U.S. inflation. So foreign banks began to cash in their dollars for gold to hedge against that, withdrawing $1.7 billion in 1965 alone.
The situation worsened as U.S. military budgets grew, and by late 1967, there was a full-blown monetary crisis as Britain devalued the pound sterling and European nations, especially France, began to call for a change in the U.S.-dominated world economy. French President Charles DeGaulle warned of an “American takeover of our businesses” resulting from the “exportation of inflated dollars.” At the same time, fourth-quarter deficits rose to $7 billion, triple the previous rate for the year. Among the president’s economic advisors, references to 1929 became a common occurrence.
DeGaulle and Gold Crisis
By early 1968, as the Tet Offensive shocked the world, the international economy was in a less well-known crisis as well. Deficits grew by over $300 million a week and gold losses amounted to almost $600 million in the first weeks of March 1968 alone. Should European banks continue to exchange dollars for gold, it would weaken the dollar and possibly ignite a series of foreign currency devaluations, not unlike the Great Depression.
At that point, Wall Street sharply turned against the war. Walter Wriston, the president of Citibank, said the odds on economic stabilization “would be greater if the Vietnamese war ended,” a position echoed by Goldman, Sachs economists. Most acutely, Federal Reserve Chair William McChesney Martin, alarmed by the costs of Vietnam and fearing a repeat of 1929, complained that “I have been trying for the past two years to make the point on ‘guns and butter’ and the cost of the Vietnam war, economically, without too much success but I think in due course the chickens will come home to roost.” At the same point that the Tet Offensive was calling into question U.S. military power, the gold-dollar crisis was undermining the basis of America’s postwar Keynesian economic growth.
Finally, the president stepped in to stop the bleeding. He temporarily froze gold transfers and, more importantly, began to take measures to slow down the war in Vietnam and military spending; as a first step he rejected the reinforcement request, which would have cost another $25 billion. Johnson, and his advisors understood that the global financial situation now made it impossible to meet the military’s request for a huge increase in manpower (which was not politically feasible anyway). The war was no longer affordable, a painful reality to the White House in 1968 but little examined or discussed since.
With the war now an economic albatross, military officials, never sanguine about Vietnam at any rate, began a political offensive to force Johnson to be held accountable for future failure. The military realized that the request for more forces would cause a political firestorm; the Army’s Pacific Commander, General Dwight Beach, “had commented that it would shock” government officials. Not only had the White House rejected Westmoreland’s previous proposals for such escalation, but the president himself on February 2d had told reporters that he saw no reason to expand troop levels beyond the 525,000 then deployed to Vietnam. Westmoreland and Wheeler made the huge request anyway.
Johnson was worried that the crisis of Tet might be politically devastating. The president saw an empire beginning to show cracks and knew that in addition to battlefield conditions, the economic costs of war at home, the interests of Wall Street, and the stability of the Atlantic Alliance had to be addressed. At a meeting with his advisors, he charged that “all of you have counseled, advised, consulted and then–as usual–placed the monkey on my back again . . . I do not like what I am smelling from those cables from Vietnam.”
Cronkite’s Report from Vietnam
Johnson’s outburst may have been disingenuous but it was well-founded. The monkey in fact belonged squarely on his back, but it was true that his advisors had developed even more grave reservations about the Vietnam War as a result of Tet. Thus, the president feared that the military might be able to exploit White House division over Vietnam. “I don’t want them [U.S. military leaders] to ask for something,” Johnson worried aloud, “not get it, and have all the blame placed on me,” which, as the war waned and ended, was precisely what happened.
Although not expecting such a huge reinforcement request, it was thus clear that the president understood the political implications of any future moves regarding Vietnam. Ambassador to Saigon Ellsworth Bunker had understood as well, warning Westmoreland against asking for so many additional forces because reinforcement was now “politically impossible,” even if Johnson had wanted it, which was also more unlikely than ever. The president’s rejection of the request for more resources, then, was not a surprise, but it did enable the military to charge that they were forced to fight “with one hand tied behind their back” and create a narrative of military success being derailed by political mischief.
LBJ and Westmoreland
The early months of 1968 have become the subject of intense scrutiny because of events in Vietnam and political crisis at home. But the dollar and gold crisis was just as historically important, if not more so. As Tet exposed the limits of the U.S. military, the rush to trade in dollars for gold showed the weakness of the American-led global economy. But while Americans heard reports about the situation in Vietnam every day, information on the emerging global economic crisis was not nearly as widespread, despite its importance
To study wars and major turning points in wars, such as Tet, is essential, but to neglect the larger context and consequences creates historical 
misinterpretations and perpetuates liberal explanations about “winning all the battles but losing the war.” Wars not only damage humans and the countries where they are fought, but spread beyond active participation and geography to affect untold numbers everywhere. Like armed conflict, economic crises crush and kill people as well. The money spent fighting the war in Vietnam was money not spent on Research and Development, investment, education, housing, or health care. Along with the oil shocks of the 1970s, the economic aftermath of Vietnam were responsible for major pivots, and decline, in America’s global economic role in the 1960s and 1970s, leading eventually to the breakdown of Bretton Woods.
Studying Tet as a military victory but political defeat brought on by Walter Cronkite is an engaging story, but historically inaccurate and politically damaging. In Vietnam (and later in Afghanistan and Iraq), in the battles and economic breakdown, the people who
