Liberals were upset that ALCOA was a big, bad monopoly. Eleanor Roosevelt was still much more anti-business than Franklin, and was often furious at him.Īfter 1940, antitrust enforcement virtually shut down. Wartime planning was far more corporatist than New Deal planning, with far less class warfare. The stereotype of FDR as a regulation-lover flies in the face of experience in the 1940s, when Roosevelt ended his cold war with business. A magnificent and little-appreciated fact, however, is that even though the government intervened far more deeply than in World War I by imposing wage and price controls and surtaxes, raising funds through war bonds, rationing goods, and compelling industries to work for war production FDR negotiated a sense of partnership rather than simply imposing the government's will. The war was like a wave coming over that conservative coalition the old ideological constraints collapsed and government outlays powered a recovery.įor a time the government became the purchaser of one-half of all the goods produced by the American people. When the economy had begun to bounce back, FDR pulled back on government spending to balance the budget, which contributed to the recession of 1938. By 1938 he had lost his working majority in Congress, and a conservative coalition was back, stifling the New Deal programs. ![]() Despite the New Deal, even President Roosevelt had been constrained from intervening massively enough to stimulate a full recovery. government to surmount the Great Depression. World War II provided the ideological breakthrough that finally allowed the U.S. The answer, I think, is partly ideological. Historians, economists, and politicians have long wondered why this remarkable social and economic mobilization of latent human and physical resources required a war. ![]() But we have much to learn from that achievement as we face our troubles today. No doubt the historical conditions of America's economic surge during World War II were singular. It is no exaggeration to say that America won the war abroad and the peace at home at the same time. The war also made us more of a middle-class society than we had been before. That led to the GI Bill, which helped lay the foundation for the remarkable postwar expansion that followed. Public opinion held that the veterans should not return jobless to a country without opportunity and education. ![]() In addition, because the mobilization included the ideological argument that the war was being fought for the interests of common men and women, social solidarity extended far beyond the foxholes. Housing conditions were better than they had been before. The war brought the consolidation of union strength and far-reaching changes in agricultural life. Blacks and women entered the workforce for the first time. The war brought full employment and a fairer distribution of income. The war also created entire new technologies, industries, and associated human skills. BY 1944, as a result of wage increases and overtime pay, real weekly wages before taxes in manufacturing were 50 percent higher than in 1939. America was the only that saw an expansion of consumer goods despite wartime rationing. War needs directly consumed over one-third of the output of industry, but the expanded productivity ensured a remarkable supply of consumer goods to the people as well. The government expenditures helped bring about the business recovery that had eluded the New Deal. During the war 17 million new civilian jobs were created, industrial productivity increased by 96 percent, and corporate profits after taxes doubled. America's response to World War II was the most extraordinary mobilization of an idle economy in the history of the world.
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