in 1946....why didnt we slip back into a Depression?

[TheBigGuy]

After WWII, im wondering why the USA didnt move back into a Depression.

I know there was alot of defense spending in WWII....at the peak it was 40% of the GDP....but wasnt this all payed for by "borrowed money"...a big Federal deficit?

So when WWII ended we had spent alot of money on troops, bombs, tanks, etc....but also (probably) had a huge deficit.

Not only that defense spending really sank down to near pre-war levels....so there was no real "cold war" spending yet.

So what kept the economy from going back into Depression after WWII?..during the years from 1945-46-47-48-49?

[bleedingheart]

1. We started rebuilding the world... and people were ready to

party... years of victory gardens, no nylons or small luxuries made a bunch of people ready to truly celebrate.

Then there was all that rebuilding!

[Ellen Forradalom]

2. We were the only industrialized nation with its infrastructure intact.

And, as the previous poster noted, there was a lot of pent-up consumer demand from the war years.

[angka]

8. pent-up money too

full employment for five years with nothing to buy makes for fat bank accounts. and the government faithfully paid off the war bonds.

[joshcryer]

9. Heh, I guess that tells us when the military complex began...

...

[Bozita]

14. That pent up demand was also building throughout the depression years.

Lotsa new gadgets, very little money.

Many had iceboxes even in 1946.

Vacuum cleaners were a real luxury.

Most folks owned radios. Hmmm.

[AP]

3. Europe, America's only real economic competition was too

devestated to compete.

With fascism out of the way, economies

[Maple]

4. Another view

IN ONE OF HIS FAMOUS SPEECHES Churchill asked America 'Give us the tools and we will finish the job'. But America wouldn't 'give' anything without payment. After two years of war, Roosevelt had drained Britain dry, stripping her of all her assets in the USA, including real estate and property. The British owned Viscose Company, worth £125 million was liquidated, Britain receiving only £87 million. Britain's £1,924 million investments in Canada were sold off to pay for raw materials bought in the United States. To make sure that Roosevelt got his money, he dispatched the American cruiser, 'Louisville ' to the South African naval base of Simonstown to pick up forty two million Pounds worth of British gold, Britain's last negotiable asset, to help pay for American guns and ammunition!. Not content with stripping Britain of her gold and assets, in return for 50 old destroyers, he demanded that Britain transfer all her scientific and technological secrets to the USA. Also, he demanded leases on the islands of Newfoundland, Jamaica, Trinidad and Bermuda for the setting up of American military and naval bases in case Britain should fall. (Of the 50 lend lease destroyers supplied to Britain, 9 were lost during the war)

QUOTE. Lord Beaverbrook was later to exclaim 'The Japanese are our relentless enemies, and the Americans our un-relenting creditors'.

http://members.iinet.net.au/~gduncan/facts.html

[Character Assassin]

11. You need to understand what you're posting before you post

But America wouldn't 'give' anything without payment. After two years of war, Roosevelt had drained Britain dry, stripping her of all her assets in the USA, including real estate and property.

That is such a gross, biased and inaccurate oversimplification that I wonder why you wouldn't have looked or searched a little further before posting it.

I know bullshit when I smell it.

That source is bullshit. And this is coming from someone who cannot stand the legacy of that supreme POS, Roosevelt, who screwed us over but good.

Back it up with facts, not opinion.

[Muddleoftheroad]

25. FDR?

What do you have against FDR. I mean other than the fact that he led us through a world war -- successfully -- and helped put into place our social safety net?

[Clete]

5. By then Hoover was gone and Truman was President.

[Lone_Wolf]

6. People actually saved up quite a bit of money during the war years

Things were rationed during the war so it was actually difficult for people to spend it. It was kind of a forced savings. When the war was over, people splurged. Also, the United States was pretty much the only industrialized country that was spared from the ravages of war. Most of the other countries' manufacturing capabilities were destroyed. So they had to buy from us. There are many other reasons as well, but these are biggies.

[MUAD_DIB]

7. Actually, the depression lingered on in some

places in America. WWII didn't just end and everybody was swimming in money. Some places took more time than others.

[sandnsea]

10. Also the GI Bill

Low interest loans for housing. Babies being born who needed houses and consumer items. College money so we ended up with better educated workers. Alot of reasons I guess.

[Chesapeake]

12. don't forget leadership

A depression under idiot boy would be the end of America

[ScotTissue]

13. Several reasons

There are several reasons:

Rebuilding of Europe and Japan was certainly one, though that did not occur for years after the conflict and in fact most of Europe saw living conditions far worse than the Great Depression even into the 1950s. The loss of human capital, not the least consequence of war, took its toll.

But here are reasons why the US had success:

1. Confidence and optimism

2. Returning soldiers created a housing and baby boom. Spending skyrocketed.

3. Keynesian economics moved from academic acceptance to general practice.

4. Money was spent to convert a war time economy to the consumer boom of the post war years. Opportunity was everywhere.

[Yavin4]

15. Massive, Massive, Massive Government Spending

Both here and abroad. The top tax bracket was 90%. We had few millionaires, but we created the largest middle class in U.S. history. Almost over night, millions of Americans became homeowners, and millions of GIs headed to college. The massive govt. spending allowed both Western Europe and Japan to get back on their feet.

[aquart]

16. Returning soldiers needed homes.

Women were tossed out of the factories so that returning GIs could have jobs.

But no housing had been built during the war, and returning soldiers needed homes for their newly pregnant wives. So the construction industry was hiring. The GI Bill helped soldiers with mortgages, education, this was a grateful nation.

Houses need furniture. Appliances.

And everywhere, color. Lots and lots of color.

Lawncare. Barbecue supplies.

Alcohol. Scotch. Martinis. Mixed drinks. There were a lot of memories to bury.

[TheBigGuy]

18. oh..the noir angle! Never thought of that!

Alcohol. Scotch. Martinis. Mixed drinks. There were a lot of memories to bury.

Yeah....interesting!

Also..this period, the late 40s (& early 50s) was the heyday of film noir, too.

[MiltonLeBerle]

17. Swords into plowshares.

There were a lot of jobs involved with switching gears in the industrial sector, and a feeling of exuberance and relief among "consumers" after 4 long years of very real war...They wanted to make up for that lost time.

[TheBigGuy]

19. I wonder how much of this was "planned"?

Does one just switch gears in an industry? Was there some sort of assumptions in the buisness world that there was this pent-up demand?

The accounts of this period make it all seem so "automatic".

Yet I wonder how this could be...surely some assumptions where made to permit retooling to certain kinds of production....

[w4rma]

20. Roosevelt's New Deal wealth transfer from the wealthy to the masses

Hoover tore down the economy by doing nearly the same things that Bush is doing. Research President Hoover and the big buisness robber barons of the time for background. Roosevelt, put in place the "New Deal" which included a *very* progressive income tax (90% or so for the most wealthy bracket).

Paul Krugman (NY Times columnist on economics) has an excellent column on this period of American history known as the "Gilded Age":
http://www.pkarchive.org/economy/ForRicher.html

[luckydevi]

21. war

You have to realize the war killed a great deal of the workforce, so there were a lot of jobs available to come back to.

[newyawker99]

24. Hi luckydevi!!

Welcome to DU!! :toast:

[trogdor]

22. It was pointed out by the government...

that it was patriotic (not to mention a good idea) to hold your war bonds until maturity. If everyone cashed them in and bought new cars, houses, whatever, at the same time, it would have resulted in economic chaos. The Truman admin. knew this, so it embarked on a campaign to get people to hold off on unnecessary spending long enough for the economy to normalize.

[luckydevi]

23. 48

We really didn't get out of a depression until about 1948/49. I totally disagree with the assertion that government spending got us out of the depression. Many have argued that the great deal actually prolonged the depression.

[rman]

26. did people starve to death

while there was ample production, till 48/49?

If there was still depression by then, then it certainly wasn't as severe as it was before the New Deal.

TIMELINES OF THE GREAT DEPRESSION
http://www.korpios.org/resurgent/Summary.htm

[JNelson6563]

27. and that middle-class

expansion, my god what a bunch of upstarts!!! Damn that Gov. spending and all that education for those lowly peasants.

/sarcasm

Julie

[trof]

28. prozac

Sorry, couldn't resist.
I'm willing to be forgiven.
;-)