post-war boom

How does war affect the economy?

  • Weapons costing money — e.g bombs can’t be reused

  • Destroyed buildings have to be rebuilt

  • Shortage of workers due to deaths, also less people spending money or tax if dead

  • If main breadwinner dies, gov needs to assist the family

  • Money spent on medical fees + benefits for injured

  • Trade becoming more difficult — attacked ships

  • New inventions — superglue created during Vietnam, new types of Vehicles (jet engines ww2)

  • New jobs in military and war industries

American mainland was generally not destroyed, only some parts of Hawaii, meaning they didn’t have to pay for property damage.

USA selling weapons well before getting involved in war and got involved in wars following.

economic growth 1945-55

federal gov policy

GI bill / provisions for veterans 1944:

  • Servicemen’s readjustment act

  • Veterans received a range of benefits including:

    • Guaranteed loan of $2,000 for business start-ups from veterans administration

    • Federal housing authority supported up to 90% of house’s value

    • VA gave servicemen low-interest mortgages and did not have to have a deposit to secure a mortgage

  • Stimulated major construction boom in late 40s, early 50s

  • 1956: 4.3 mil home loans had been made with a combined value of $33 bil

  • Over half the 7.8 mil returning servicemen attended colleges and technical schools through grants

  • 1944-56, bill cost federal government $14.5 bil

How did this boost the economy: loans for businesses helped them get started and grow, housing/construction boom, education => men able to go out and work in industries

  • Federal gov built more highways and increased their spending on roads from $79 mil in 1945 —> $2.6 bil in 1960

    • People more likely to buy cars, transport links for trade, people travelling to work

  • Taft-Hartley act 1947: limited the power of trade unions, especially rights to strike

    • Stopping wildcat strikes of ww2

  • 600% rise in federal funding for scientific research and development

    • Computers — IBM + Harvard/US army, began in ww2 with penicillin and synthetic rubber, lycra and plastics, new technologies — nuclear power

    • Military industrial complex, sell off assets to private firms (—> general motors, McDonnell Douglas aircraft, Dow chemical operations) = military and business working together

  • 1941-45 technological breakthroughs: nuclear physics, aerospace, electronics and chemicals

  • Fed. gov sold aluminium plants and aircraft factories to private buyers, increased productivity — 1945: 310 hours to make car —> 1960: 150 hours

  • ‘Knowledge revolution’, professional and technology jobs grew in number, salaried mc workers increased 61% 1947-57

—> How did this boost the economy: stimulated industry, people buying cars, travelling to work in certain areas and transport made easier, industry wouldn’t be interrupted by strikes, new technology and products

changing employment opportunities

  • Aircraft + shipbuilding continued into peacetime due to cold war tensions. Military preparedness, Berlin crisis and Korean war = gov expenditure increased and demand for military material = domestic eco buoyant

  • Growth of disposable income and consumer demand. 1956 — 2 mil car production increased to 8 mil 1955 —> jobs for skilled w/ higher wages

  • Clerical service growth, opportunities for women

  • General motors, ford etc. biggest corporations in USA = demand for oil increased

  • 1945 — 8 shopping centres by 1960 there was 4,000. TV, washing machine, toaster etc. created jobs for workers making goods

  • New industries: jet engines, computers, TV, white collar jobs, marketing, advertising, service sector

—> How did this boost the economy: people have more money to spend, more jobs in new sectors, skilled and high wage

consumerism

  • Avg. family in suburbia earned $6,500 —> 70% higher than the rest of the country. Bought boats, swimming pools, foreign travel

  • Drive-in restaurants and movie theatres, out of town shopping centres

  • 1954 — McDonalds created by Ray Kroc became fast food chain

  • 1960: 40 mil Americans (22%) lived below poverty line, inner cities fell into economic decline and associated w/ crime

  • Credit card — diners club

  • Suburbs — malls

  • New products — TV, cordless, dishwashers

—> How did this boost the economy: demand, disposable income spent

increased mobility — car ownership and suburbs

  • 1946-55 car production 4x

  • 1950: ⅔ of all cars and trucks produced in USA

  • 1955: 9.2 mil cars, general motors, ford, chrysler

  • Availability of cars = mobility, growth of suburbs, domestic tourist industry

  • 1950 world’s first credit card — diner’s club, American express in 1951

  • New innovations in models, ‘built in obsolescence’ marketing e.g tail fin, two tones, Pontiac strato-streak v8 went 2x official speed limit

  • Federal construction of highways. Fed. spending $79 —> $2.6 bil 1946-60

—> How did this boost the economy: fuelling economy with money, monopoly worldwide over cars, buying/spending large amounts became easier, able to buy houses etc. using credit cars, roads —> travel, can work in new places or for leisure/travel

  • No. of people living in suburbs increased 10% 1950s, suburban houses doubled

  • Cheap land, mass construction decreased costs to build, greater availability of financial credit increased demand

  • 1948 — 2 mil couples still living w/ relatives = increased demand

  • Levitt = 1942 built 10,000 houses quickly bought up and occupied by 40,000 people (saw opportunities of GI bill), prefab walls and doors quickly assembled, included swimming pools, schools, athletic fields too

  • Segregated. 1953 NY Levittown contained 70,000; largest development w/o black Americans, declared illegal 1960s

  • California — Henry J Kaiser, Henry Doelege

—> How did this boost the economy: housing boom for suburbs — easy and cheap to build, people more affluent in suburbs