** war and social upheaval: World War II -- nationl economies United States








World War II National Economies: United States


Figure 1.--This family snapshot was taken at a railroad station somewhere in the America Midwest, we think about 1920. The buildings in the background are grain elevators. Vast areas of lan were oriducing grain in enormous quanties. This enable the United States to feed the Allies and prevent famine in War-devestated Europe. America would do the same in even lrger quantities in World War II. Also notable is all the cars lined up at the station. American industry that produced those cars played only a minor role in World War I, although American trucks were alreadybimportant. Of course it would play aecisive role in World War II. Look at the number of cars and this was in the middle of nowhere. We have seen countless images from German cities where we do no see so many cars. Kaiser Wilhelm and the German High Command did not believe that such economic power could be converted to military power--to Germany's detriment. Two decades later another German leader would fail to heed the lessons of World War I. And notably for a the greatest mechanized war in history, a country's automobile industry largely determined its ability to produce military vehicles.

The United States by an enormous margin had the world's largest and most efficent economu. The United States ($66 billion annual output) included a massive industrial output as well as agriculture and raw materials. Especially important was America's oil production. The United Stayes thus at the time of World War II was the only country with the economic capacity to wage war on a global scale. It was also the country least willing to wage war. Large numbers of American had pacifist geelings, esoecially the large German population in the Midwest, or opposed to getting involved in another European war fo a range of reasons. As a result, when war broke out in Europe the United States did not have a substantial army, let alone producing weapms in large quantities. The United States had engaged in limited naval construction and some development of planes. Even in 1941, however, American factories were turning out mostly car using large quantiires of steel, copper, and cromium rather than tanks and other military vehicles. The United States did not bgin to significantly increase military spending until the fall of France (June 1940), and even then the increases were still relatively modest. Hitler reached the same conclusion as the German High Command in World War I, he could complete his conquest of Europe before the United States could mobilize its substantial industial potential for war. After Pearl Harbor, the samne indutrialists that had been accused of war profiteering during World War II stepped forward to turn the Arsenal of Democracy into the most formibable war engine in human history. Within a very short period of time, America emerged from ddepression and unemployment to booming factories and alabor shortage. Presidebnt Roosevelt who had been accusing these men of being 'econimic royalists' personally recruited them to transform the American economy. The United States not only had a vast industrial establishment, but copious natural resources, including oil, and a huge agricultural potential. The United States financed the war effort by borrowing. There were a series of well-publicized bond drives. This not only generated money for the war effort, but helped to tampen down inflation.

Money

Stalin is often quoted as saying that in destroying NAZI Germany, "the British gave time, the Americans gave money, and the Russians gave blood". This may be acropharal, but it likely how he and others thought. The term money, is how Communists think. But it is not really applicable here. America did not buy weapmns with momy, it created them. What money or wealth does is it unleashes human creativity. Just lookm where all the great attributes of civiiization come from (architecture, art, industrial products, literature, math, medicine, music, and science) come from -- wealthy socities. Or why the Soviet Union would ultimately collapse and Communist China later would turn to capitalism. It was because their capitalist economies failed to generate wealth and could not compete with the capitalist West. This is as true when civilization first apprared in Mesopotamia as it is today. Thanks to the impact of Socialist thinking, money and wealth has a somewhat tarnished image in today's thinking. But the simople fact is that without monery/wealth creativity alone has no way of impacting society. There were the same ratio of creative minds in the medueval dark ages as there are today, but most of those medieval minds were were peasants constrained by the society and the need to grow enough food to survive. Medieval peasants had no way of using their intelect to alter society. Money or wealth males that possible. It is no accident that most of the game changing weapons of World War II and the ability to manufacture them came from United States--the ultimate bring the atomic bomb.

The Depression (1930s)

The Depression was surely the most traumatic economic event in American history. President Hoover failed to constrain it, although he believed that his oolicies were working and it was the New Deal that prolonged the Depression. It is not at all clear that this was the case, but important economists today believe that some New Deal policies did prolong the Depression. Extrodinary high new taxes surely had a serious adverse impct. President Roosevelt promised a 'New Deal' for the American people. The Oresidentvand the men and womrn he brought to Washington set about to reconstruct American capitalism. Important programs were struck down by the Supreme Court, but others were sustained and became part of the American economic frabic. The New Deal through relief programs mitigated the adverse exoeriences if indivuduals and families. What the New Deal did not do was what voters elected President Rooseveltv to do--end the Depression. As late as 1939 when Hitler and Stalin launched Workd War II, the United States was still deeply mired in the economic crisus. GDP and employment are two of the most important measures of economic activity. Economists differ somewhat onthe statistics, but most economic studies paint a similar picture. After the Wall Street collase (1929), the American GDP fell for 4 srraight years and then slowly began to reciover. The GDP managed to reach reach 1929 levels in 1936. [Watkins] Unemployment durung the Depression averaged 13.3 percent. War orders from Europe was helping to being the American economy to life. There were, however still some 5.3 million Americans still unemployed (Summer 1940). This was far below the 11.5 million unemployed when President Roosevelt was elected (1932). Even so it was a still substantial figure. [Darby, p. 7]

The American Economy

The United States even with the Depressionn by an enormous margin had the world's largest and most efficent economy. The United States ($66 billion annual output) included a massive industrial output as well as agriculture and raw materials. Especially important was America's oil production. The United Stayes thus at the time of World War II was the only country with the economic capacity to wage war on a global scale.

Popular Attitudes

It was also the country least willing to wage war. Large numbers of American had pacifist feelings, especially the large German population in the Midwest. Many Germans emigrated to America to get awayv from military conscription and military service. Americans were opposed to getting involved in another European war for a range of reasons, not the least the fear of fighting the Germans. Other Americans were not pacifists, but strongly isoltionist.

Consumer Goods

As a result, when war broke out in Europe the United States did not have a substantial army, let alone producing weapms in large quantities. The United States had engaged in limited naval construction and some development of planes. Even in 1941, however, American factories were turning out mostly car using large quantiires of steel, copper, and cromium rather than tanks and other military vehicles.

Military Preparations

The United States did not begin to significantly increase military spending until the fall of France (June 1940), and even then the increases were still relatively modest. Hitler reached the same conclusion as the German High Command in World War I, he could complete his conquest of Europe before the United States could mobilize its substantial industial potential for war.

Recruiting Industrialists

After Pearl Harbor, the samne indutrialists that had been accused of war profiteering during World War II stepped forward to turn the Arsenal of Democracy into the most formibable war engine in human history. Hitler launched the long-awaited Western offensive (May 10). President Roosevelt had hoped that the Allies would be able to stop the Germans with American material support. The Deutsche Wehrmacht proved him terribly wrong. Within only 5 days the Netherlands surrendered (May 15). And the Dutch Army at the time was about the same size as the U.S. Army. General Marshal told President Roosevelt that if the Germans landed five division in America, there would be nothing that the U.S. Army could do to stop them. Belgium surrendered 2 weeks later (May 28). The Belgians who had effectively resisted the German at the start of World War I, surrendered 2 weeks later (May 28). At the time the British and French were attempotung to escape the German Panzers at Dunkirk. At first it looked like few of the men could be brought off the beach. In that enviroment, President Roosevelt picked up the phone and made certainly the most important telephone call of the War. And he made it to a very unlikely person--Willian Knudsen. Knudsen was an ardent Republican who had vocally opposed the President for 8 years and the very embodiment of the individuals who the President had called economic royalists. To the credit of both men, the put aside partisan differences and cooperated to save not only America, but the the Free World as well. The United States had the greatest industrial potential of any country. But potential had little practical meaning in the current crisis. American industry was not geared for war. The United State was not even manufacturing tanks despite what had transpired in Europe. And there was not realistic plan for converting American industry for war. Nor was there any expertise in Washington for beginning the effort. This is why Roosevelt called Knudsen. And the team of other Roosevelt-hating Republicans that Knudsen put together accomplished the most remarkable industrrial trnsformation in history. By the times Japanese bombs fell on Pearl Harbor, American arms production had equaled that of NAZI Germany--and that was just the begginning of an American industrial tidal wave which would overwealm the Axis.

Arsenal of Democracy

Within a very short period of time, America emerged from ddepression and unemployment to booming factories and a labor shortage. Presidebnt Roosevelt who had been accusing these men of being 'econimic royalists' personally recruited them tio transform the American economy. World War II was an industrial war. The NAZI's used Germany's industrial prowess to build modern weapons and the Wehrmacht was the first military to develop effective tactics for the new weapons. Germany had, however, had an industrial plant a fraction of that of the United States. This was one reason that Hitler launched the invasion of the Soviet Union when he did. He realized that he would have to defeat the SovietvUniion when before America with its industrial strength entered the War. Goebells quiped that the Americans only knew how to make razor blades. Hitler and many senior Whermacht officers knew that America posed a mortal threat to the Reich. There was no discussion of racial supermen in America. From the beginning President Roosevelt stressed industrial production. And here America had an unparalled capacity to produce. The key to winning the War was production. The record of American war production is staggering and in large measure determined the victorty of the the Allies in the West and auded the Soviets in the East. American produced weapons and equipment in quantities that suprised not only the British, but many Amnericans as well. American productioin rose to levels neither the NAZIs and Japanese did not believe possible--both the rapidity of conversion to war production or the absolute quantities.

Science

American made considerable industrial progress during the 19th century without a major scientific establishment. Americans proved very inventive and like inventions in Britain during the early years of the Indudtrial Revolution, major innovations were conceived by individuals with limited or no scientific backgrounds. The National Accadmy of Sciences was founded during the Civil War, but was primarily concerbed with academic matters and not public policy issues. Americans interested in science often went to Europe to study at prestigious universities. Many studied in Germany because of the prestig of German universities. One of those individuals was Franklin Roosevelt's half brother who was studying engineering. America's expanding university system and demand from growing industries stedily fueled the growth of its scientific establishment. The first limited government involvement with science was The New Deal's Science Advisory Board (1933), It was primarily interestd in social policy and got caught up in the debates over the New Deal and expanding role of government as well as conflicts with the NAS. It was as a result disolved. A major development began immediately after the NAZI take overin Germany (1933). The NAZI persecution of Jews and anti-NAZIS caused large numbers of scientists to flee the country. The list includes Hans Bethe, Albert Einstein, Enrico Fermi, Leó Szilárd, Edward Teller, Felix Bloch, Emilio Segrè, and Eugene Wigneramong many others. Many found refuge in the United States where American academics who knew them found positions at laboratories and universities across the country. America at the time was developing an important scienific establishment and the influx of refugee scientists, in some cases leaders in their field, significantly aided this process. Many would do some of their most important work in America. The foundation for modern American system of science policy was begun informally largely through the work of Vannevar Bush. Bush was a noted American scientist and was appointed to the National Advisory Committee for Aeronautics (NACA) (1938). Bus had become aware of the lack of coordination between scientists and the military while working on submarine detection systems. NACA efforts to imprive American military aircraft ran into problems with a budget minded Congress. Bush appealed for help from President Roosevlt who had already concluded that the United States needed to build a powerful airforce. The President made him his informal science advisor, the beginning of a relationship which continued throughout the War. Bush had contacts with the NAS which after Pearl Harbor was mobilized for the war effort. When President Roosevelt received a letter about German nuclear research, he turned to Bush. The result was the Manhattan Project. As a result, of America's growing scientific capabilities, unlike World War I, American science played a major role in World War II. American science stronly supported the war effort and a collaboration began with Britain, which had already mobilized its science establishment for the war effiort. The Anglo-America science establishment proved to be a fearsome factor in the War. American scientists achieved a wide range of notable accomplishments. Many were joint projects with the British who had many secret projects already underway giving American science and industry a jump start. The crowing achievement was the Manhattan Project which unlike many of the German secret weapons prgrams had a major impact on the War. The United States after the War began formulating a national science policy. Bush was a key player here and obtained the support of President Truman. This would play an important role in the Cold war. After the war we begin to see America increasingly dominating Nobel scientific awards

Natural Resources

The United States not only had a vast industrial establishment, but copious natural resources to support that industry. The two central components of an industrial neconomy was coal and iron and the United States had abundant domestic sources of both. Many natural resources were needed in huge quanties to wage war, especially the global war which World War II became. No country had as many critical resources a the Soviet Union, but many of their resources were not developed. The United States while it did not have a large army when Hitler and Stalin launched the War, had most of the vital resources need to wage the War already developed. And America had an efficent rail system, unhindered by Axis bombing, to fully supply industry as the country shifted its immense industrial to a war footing. There were two basic types of resources, 1) metals and other non-fuel materials and 2) fuel resoueces. The important metals and non-fuel materials included: aluminum, chrome, cobalt, copper, iron, lead, phophate, sulphur, tin, tungssten, and zinc. The United States had domestic sources of mmany of these metals and Anglo-America command of the seas mean that the United states could readily import what it could not produce itself. Latin America was the source of most of the raw materials America lacked and for the most part beyond the sealanes for delovetong those resources were beyond the reach of German U-bosts to unterdict. Important iron ore resources and the world's largest steel making capacity gave the United States the potential to become the largest manugacturer of the implements of war from shipts to tanks and artillery. The weakness of the German war industry can be seen in that Germans had to import almost all of these mateials. And the United States went from becoming a minor producer of arms to the world's leading producer. The Unites States was able not only to supply its owm military, but that of its fughting allies as well. The energy resources included: coal, natural gas, and oil. The energy resources are best known as transportation fuels, needed to move the machiney of war--airplanes, trucks, tanks, and ships. The German shortage of oil would prove to be the jugular of the NAZI war machine. American oil fields were especially important to both fuel the American and British war effort. Mexico abd Venezuela also delivered imprtant quantities. America was also Japan's principal source of oil. The American embargo was an important step toward war. The Japanese seized the oil fields of the Dutch East Indies and British Borneo (1942), but soon found that even after repairing damage to the fields that the U.S. Navy, espcially the American submarines would make it virtually impossible for the Japnese maru fleet to get the oil back home to fuel the industries of the Home Islands. And subsequent shortages crimped the Japanese war effort from an early point. Coal was very important, primarily to fuel trains which were the world's primary terrestrial transport system. Domestic economies including war industries could not function wihout coal. Coal also fuel electrity produvtion, another vital indistrial component needed by the domestic economy and war industries. One reason the United States was able to build an atomic bomb was the country's huge electrical generating capacity. Electrity was also important in the production of both fertilzer for farms and munitions for the military. The principal important resource America did not possesshave was rubber. The United States relied on nsturl rubber produced on rubber tree plantations which could only be sited in tropical environments. Proiduction was concentrated in British Malaya. And the Japanese cut off the primary source of rubber when at the onset of the Pacific War they seized Malaya from the British (January 1942). The Unites States set out to expand production in other tropical areas (Brazil and Africa), but the primary sollution was a crash program to create an entire new industry--synthetic rubber production.

Agriculture

America also had a huge agricultural sector. American agriculture had never recovered from the fall in the exoort nmarket following World War I. The Depression in rural America began a decade earlierv than in urban, industrial America. And if that was not bad ebough, the southern Plains were hit by one of the greatest ecological disasters in American history--the Dust Bowl. The New Deal made a major effort to improve conditions in rural America. The major rural program was coordinated by the Farm Securuty Administration. Crop supports, credits, developing new methods and a host of other efforts like Rural Electrification suceeded in sigbificnhtly improving conditions. One of the major efforts was to reduce harvests in an effort to drive up prices. This meant that at the time of World War II, the United States had a very substantial unused agricultural capacity. The ability to rapidly ramp up plntings anfd haevests would be a very important part of the American contribution to the Allied war effort. Improved methods anhd consersation measures as well as the returns of the rains helped in this regard to bring the southern Plains back to intensive cultivation.

Rationing

America experienced rationing for the first time in World War II. Some products that were rationed during World War II were sugar, meat, coffee, typewriters, fuel oil, gasoline, rubber, and automobiles. Food rationing probably affected most Americans the most. Each American was issued a book of ration cupons each month. Rationed goods were assigned a price and point value. Families were not restricted to certain quantities of rationed goods. But once their cupons were used up, they could not buy rationed goods until the next month. Families were incouraged to plant victory gardens. These gardens supplied a mjor part of the vegetable supply during the War. Rubber and gas were the most vital product rationed. Limited fuel supplies during the war affected America in many ways. Gas rationing was done differently than food rationing. Car owners had to register and were given windshield sticker based on how the car or other vehicle was used. Pleasure driving was prohibited. We have less information about clothing at this time. I do not believe that clothes were actually rationed, but the availability of civilian clothing was very much affected. Certain fabrics like silk or synthetic fibers were not available for civilian use. Shoes were rationed in America. Stamp 17 in War Ration Book 1 was good for one pair of shoes until June 15. (Probably about every 3-4 months) Families could pool the coupons of all members living in the same household. Even tennis shoes which had become popular in America were hard to get because that had rubber soles.

Financing the War

The United States financed the war effort by borrowing. There were a series of well-publicized bond drives. This not only generated money for the war effort, but helped to tampen down inflation. The American economy began to surge in 1940, in part responding to war orders from Europe as well as domestic rearmamnt. The underutilization of America's economic capacity because of the Depression allowed the United States to maintain civilian consumption at a relatively high level while trememndouly increasing production to persue the War. The Government used a variety of measure to finance the war. This included deficit spending, increased taxes, and a war bond campaign. The Government's financial policy also included measures to control inflation because the increased employment increased incomes at a time when the supply of consumer goods was limited. The United States Government, even before America entered the War, initiated an ambitious advertising campaign to sell bonds. Before America actually entered the war they were called Savings Bonds. The War Advertising Council and the War Finance Committee sought to promote bond sales to finance the War and build civilian morale. The work of these World War II organizations produced "the greatest volume of advertising and publicity ever given to any product or agency" in American history. Secretary of the Treasury Henry Morgenthau sold the first Series E U.S. Savings Bond to President Franklin D. Roosevelt on May 1, 1941. The War Finance Committees sold over $185 billion of securities. By the end of World War II, over 85 million Americans had invested in War Bonds, a number unmatched by any other country. Even American children participated in the effort. Children bought Liberty stamps every week in their schools.

Labor

The core problem faced by President Roosevelt's New Deal was unemployment. And part of the New Deal effort to deal with this was ground breaking labor legislation. Congress passed the National Labor Relations Act--NLRA (1935). This guaranteed basic rights of private sector employees to organize trade unions, engage in collective bargaining, and enjoy other rights including strikes. There ere also efforts to move toward the modern 40 hour, 5 day work week. This was both a humanitarian effort at reducing the hours worked and an effort to create jobs and reduce unemployment. The major piece of legislation was the Fair Labor Standards Act--FLSA (1938). The FLSA did not probiit longer working hopur but required ovrt-time pay to discourage it. This monumental achievement was, however, not what was needed when the central American goal was after Pearl Harbor to win the War. Suddenly from being too few jobs there was a labor shortage. This was the result of factories operating at full capaity and the opening of new war plants. Annd military service took million of workers out of the work force which at the time was primarily male. The war-time need for weapons and equipment required not only the full utilization of the available labor force, but the expsnsion of that force. One measure was to increase in the workweek, some the New Deal wih a mjor effortg had just suceeded in reducing. One study indicated that the work week in Anerica was less than that of Britain and Germany, somethiung like 43 hours (August 1942). Workers in direct war factories worked slightly longer. Btitish and German workers wetre working sbout 60 hours a week. [Lee] With regards to Germany we are talking about German workers and not the foreign slave labor which became an important factor in the German war economy. American trade unions which thanks to the New Deal had considerable influence did not resist work in excess of 40 hours, but they wanted the over-time pay. One author reports thatn labor shortages did not adversely affect American production in 1942, but deliveries of neede vraw materials was an issue. [Lee]

African Americans

The Great Migration findamentally changed the demographics of black America. By the time of World War II, African Americns were no longer a largely rural southern population. There was now a substantial black population in northern cities. After the Depression, World War II opened opportunities in the North never before available. The New Deal's civil rights record leaves much to be desired, but for the first time, range of programs provided substantive aid to familes living on the brik of subsistence. A major accomplishment was an Executive Order which prohibited desrimination in Federal contracts. Although not fully implemented it had an important positive impact. The American mobilization for war resulted in an econmoic miracle beyond what the Axis or Anerica's allies believed possible. It was the greatest industrial mobilization in history. This required an enormous ecoomic expansion creating a vast number of jobs that simply cold not be filled without expansing the work force and replacing men consripted for military service. Blacks were hired in jobs and at salaries well above beyound what they had preciously experienced. As a result, the War continue to draw blacks north. This fired the migration north. ven more than World War I, the military experience created a demand for change and the belief that changes were possible. World War II involved many more black Americans than World War I both in war indutries and in the military. And it lasted three time as long.

Women


Sources

Darby, Michael R. "Three-and-a-Half Million U.S. Employees Have Been Mislaid: Or, an Explanation of Unemployment, 1934-1941." Journal of Political Economy Vol. 84, no. 1 (February 1976), pp.: 1-16.

Lee, K. (1942). "Hours of work in wartime," Editorial research reports 1942, Vol. 2 (1942).

Watkins, Thayer. "The Recovery from the Depression of the 1930s." (2002).






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Created: 6:42 AM 12/8/2012
Last updated: 3:19 PM 12/24/2021