As a student at Harvard University, Nitze gravitated toward fields of study that he thought might have a real influence on world affairs. He graduated summa cum laude with a degree in economics. He revisited Germany as a young adult, and a report that he wrote on the turbulent economic and political conditions there won him a job offer from the investment banking firm Dillon, Read and Company. Nitze began work at Dillon, Read only days before the disastrous stock market crash of 1929. By his own reckoning, he was the last man hired on Wall Street for almost a decade. From this position, he had ample opportunity to observe the workings of international finance in the most challenging economic climate. In spite of the hard times, he prospered. In 1932, he married Phyllis Pratt, daughter of a New York Congresswoman. By 1937, he was a Vice President of Dillon, Read and Company. Nitze was an early investor in Aspen, Colorado real estate, and his stake in the U.S. Vitamin and Pharmaceutical Company would eventually make him financially independent.
Despite the satisfactions of his success and a growing family, Nitze became increasingly preoccupied with the rise of dictatorships in Europe and the possibility of another world war. After a trip to Germany, he was so alarmed by what he had seen of the Nazi regime that he determined to take a year off to study, in hopes of making some sense of the world situation. He returned to Harvard and pursued graduate studies in sociology, religion and history, hoping to gain an insight into the challenge posed to liberal democracies by disciplined and aggressive dictatorships. After completing his year of study, Nitze started his own investment firm, Paul H. Nitze Company, but within a year had worked himself to the point of physical collapse. On recovering, he gratefully returned to Dillon Read.
As America prepared for the possibility of war, President Franklin D. Roosevelt sought the counsel of the financial community. Nitze's boss, James V. Forestall, became a special assistant in the White House. During World War II, Forrestal served as Secretary of the Navy, and after the war as America's first Secretary of Defense. Nitze followed Forrestal to Washington in 1940. At first he assisted Forrestal in the White House, then moved to the War Department, where he helped draft the Selective Service Act, creating America's first peacetime draft. He next served as Financial Director of the Office of the Coordinator of Inter-American Affairs. In 1942 he became chief of the Metals and Minerals Branch of the Board of Economic Warfare, then Director of Foreign Procurement and Development for the Foreign Economic Administration. In 1943 Nitze and his friend, Massachusetts Congressman Christian Herter (later Secretary of State), founded the School of Advanced International Studies (SAIS) in Washington. In 1950, the school became a division of Johns Hopkins University. Nitze maintained an office at SAIS to the end of his life, and made it his base of operations between terms in government.
The war had left the economies of other nations in ruins. Nitze concluded that a massive aid program would be necessary to avert an international financial crisis that would quickly spread to the United States. With the Soviet Union consolidating its occupation of central Europe, the crippled economies of western Europe appeared vulnerable to Communist subversion and President Harry S. Truman was soon persuaded that the reconstruction of Europe was essential for the stability of the world economy and the security of the United States. The European Recovery Plan became known as the Marshall Plan, after its most visible public advocate, Secretary of State George Marshall. Nitze was one of the plan's principal authors, and was tasked with selling the proposal to a skeptical Congress. Congress agreed to fund the plan, but not until Nitze had endured a grueling 40 days of testimony before the House Appropriations Committee. It was not the last time his stamina was to be tested in the halls of government or on the diplomatic stage.
In the aftermath of World War II, the United States could no longer rely on the isolationism that had driven America's traditional foreign policy. Along with George F. Kennan, Charles (Chip") Bohlen and Secretary of State Dean Acheson, Nitze became known as one of "the wise men" who created a new vision of America's role in the postwar world. Kennan was the first to enunciate in print the policy of containing Soviet expansionism, but Nitze soon became its most ardent exponent in the Truman administration. In 1949, Nitze joined the State Department's Policy Planning Staff as Kennan's deputy, and later succeeded Kennan as Director of Policy Planning. When the Soviet Union tested an atomic bomb of its own, Nitze supported the development of the hydrogen bomb, but he also advised that the United States build a large conventional defense establishment in peace time for the first time in its history. In 1950, Nitze wrote a classified memo for the National Security Council, NSC 68, which became known as the blueprint for American strategy in the Cold War.
Nitze faced a new challenge in the transition from the Democratic administration of President Truman to the incoming Republican administration of President Dwight D. Eisenhower and his Secretary of State, John Foster Dulles. In 1953, Nitze moved from the State Department to the Pentagon, serving as Assistant Secretary of Defense for International Security Affairs, but a number of Republican senators objected to the retention of officials from the Truman administration, and Nitze resigned. Nitze became President of the Foreign Service Educational Foundation, the fundraising arm of the School of Advanced International Studies, which had become a division of Johns Hopkins University in 1950. While out of government, Nitze wrote, lectured, and established the Washington Center of Foreign Policy Research at SAIS.
Paul Nitze served as a national security adviser to the 1960 presidential campaign of Senator John F. Kennedy. After the election, the new president appointed Nitze to serve as Assistant Secretary of Defense for International Security Affairs. Nitze advised Kennedy during the 1961 confrontation with the Soviets over Berlin and sat on the Executive Committee of the National Security Council during the Cuban Missile Crisis. He was appointed to serve as Secretary of the Navy shortly before President Kennedy's assassination in 1963. Nitze served President Lyndon B. Johnson as Secretary of the Navy and later as Deputy Secretary of Defense.
Returning to SAIS, Paul Nitze became increasingly critical of U.S. arms policy in the late 1970s. He believed the Soviets were gaining a strategic advantage through their build-up of intercontinental ballistic missiles. Although Nitze initially supported the presidential candidacy of Jimmy Carter, he parted company with candidate Carter before the election. Nitze opposed the Carter administration's arms control policy, particularly a second strategic arms limitation treaty (SALT II) that President Carter negotiated in 1979. To protest the Soviet invasion of Afghanistan later that year, the President did not submit the treaty to the Senate for ratification.
Paul Nitze told the story of his extraordinary life in the memoir Hiroshima to Glasnost, and shared his observations on a lifetime in public service in the book Tension Between Opposites: Reflections on the Practice and Theory of Politics. A lifelong horseman, skier and all-around sportsman, he remained extraordinarily active to a very late age. His wife Phyllis died in 1987, after 55 years of marriage. At his death in 2004 at the age of 97, he was survived by his second wife, Elizabeth Scott Porter, four children, 11 grandchildren and seven great-grandchildren. At his funeral service in Washington National Cathedral, his coffin was carried by eight crew members of the U.S.S. Paul H. Nitze, one of the very few ships in the U.S. Navy ever to be named for a living person.