Background: In the 1930s the USA was hit by a big economic depression after the Wall Street Crash of 1929. Millions were out of work, companies and banks had gone bust, and the system of free-market capitalism was on the point of collapsing.

President Franklin Delano Roosevelt (FDR) set up the New Deal in the 1930s. The New Deal was the Federal (all-states) Government spending billions of dollars creating jobs, by building dams, roads, schools and hospitals. Many rich people did not like this because it meant they had to pay more taxes.

The New Deal did not solve unemployment problems. In 1939 18% of American workers were jobless (9.5 million). The war however did create more jobs (especially soldiers!) and unemployment dropped to 670,000 by 1944.

Big Business

In 1942 the War Production Board was set up to convert peacetime industry into war production.

e.g. car factory --> tank factory

fridge makers --> munitions (bombs/bullets)

America had to make more aeroplanes. In 1939 the US Army Air Corps had just 300 planes. In 1944 over 96,000 were built in that year alone – 30,000 more than Germany and Japan put together.

Over $175 billion – that’s $175,000,000,000 - government war contracts were given to companies. Bigger companies such as Ford, Boeing, Douglas, Winchester and General Motors were given most of the contracts so many smaller businesses ended up going bust or being taken over by them to create super-corporations.

The public was encouraged to invest in

war bonds - like a savings account with

the government - which would be spent

on the war and returned to the investor

after the war.

Rationing and recycling goods such as metal, rubber and nylon were brought in.

Propaganda

Some companies were encouraged to make their workers feel patriotic about going to work. They were made to feel guilty if they were off sick, and were discouraged from asking for pay-rises. The $175 billion was obviously not aimed at the worker!

The main unions in America agreed not to go on strike during the war, waiting until 1945 to press for better pay.

Summary

The war brought the USA out of the Depression. US companies were now the biggest in the world and made huge profits. Government spending on military contracts became the ‘fuel’ for the growing American economy. This has been the way ever since. The big corporations formed a ‘military-oil-industrial complex’ which has had a big influence on American government policies ever since.

Key Words

depression - when the economy is failing - job losses, companies going bust

Wall Street Crash - the collapse in share prices in October 1929 which led to depression in capitalist countries like USA, Britain and Germany

free-market capitalism - the system where companies are free to make as much profit as they can without regulation by governments

Federal - the way the US is run - a federation of 50 different states. Federal law and agencies (e.g. the FBI) apply to all states.

corporations - big companies owned by shareholders, they usually compete in many sectors of the economy e.g. mining, manufacturing, oil, finance etc.

patriotic - proud and supportive of your country

military contracts - a deal between the government and a company to buy weapons, or other war equipment. This is paid for in taxes.

Snippets to remember!

Except for those who served in battle, the war was probably the best thing that had happened to the American people in the 20th century. For those at home, it meant unprecedented prosperity. Income levels had never been as high at any point in history before that time.	Worldwide, 80 million people were killed. But for America, the Second World War was also an engine of huge social and economic change for the better.
Defense plants in the industrial North and Far West became magnets for huge migrations of job-seekers from the South and East. From 1940 to 1950, 8 million people moved to the West Coast, the largest western migration in American history	At its peak, the United States rolled out a ship every day and an airplane every five minutes. All that production put money in people's pockets. Suddenly everyone was working. In 1938, the unemployment rate was 19 percent. In 1944, it was 1 percent.

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Web Links

How WWII Cured the US Depression

From an American education site

World War Two: The Home Front

Interesting lecture on the effects of war on America (US)

Coca-Cola goes to war

Details of how the Coca Cola company helped both sides in the war

The Homefront

The script from a TV documentary (US)

Recommended

Revision Guide

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