Posted by: jzinn3 | November 16, 2009

Week 13 Discussion: The Role of World War II

As we approach the end of our course, we also approach the end of the Great Depression.  This week, consider the impact WWII had on both the domestic and the world economy.

1.  How did the war effort contribute to the end of the Great Depression?

2.  What evidence is there to indicate it was war, and not other actions, that finally brought an end to the Great Depression?

Share any resources you find and be sure to reference our reading where appropriate.

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Responses

  1. Here is a very good article explaining how World War II contributed to end the Great Depression. It takes into the consideration of other countries throughout the world and the U.S.

    http://www.cyberessays.com/History/163.htm

    • ric345:

      Very interesting Essay- so is this basically saying that the the “Keynesian theory” was one of the main effects of the Great Depression??

    • I don’t think this essay is saying the Keynesian theory was a main effect but that the theory was used as reasoning behind all of the deficit spending that supported all of the New Deal programs. The essay cites that Keynesian wasn’t invoked until 1938, but as we know the New Deal programs actually began in the mid-1930s.

      The essay does give a good condensed round-table look at what the major countries in Europe were trying to do to lessen economic problems. I thought it was interesting how the author pointed out how the US went from a borrower’s role to one of creditor after WWI.

      • megamuphyn:

        Thanks!! I went back to read again!!

    • ric45,

      This article was interesting. I knew that Europe suffered because of World War II, due to draining all of their resources and money. But, I never thought in depth that the downfall of Europe is what provided the United States with the ability and resources to drag itself out of economic dispair. Thanks for sharing your article.

  2. This is another good link specifically about the Great Depression and World War II.

    http://history-world.org/great_depression.htm

    • Thanks for sharing.

      • “It is widely held that World War II was a huge Keynesian stimulus that finally brought us out of the Great Depression. On the surface, the facts seem to fit. The federal government devoted 44 percent of G.D.P. to fighting the war and ran very large deficits. Unemployment rates fell below 2 percent even as large numbers of women entered the work force.”
        This is from an interesting article in the NYTimes that talks about how a war economy is unusual. Think about it…the economy seems to be doing better, but in actuality most of the enlisted men were off in a foreign country fighting…so they certainly weren’t home buying anything. And those people left behind (men who couldn’t enlist, women, older Americans, etc.) couldn’t afford to buy anything, or if they could, nothing was available for purchase because it all went to the “war effort”. War rationing did help some people save a little because there wasn’t anything to buy, so they had a few dollars when the war ended.
        American life was just as harsh and deprived as before the war, with two big differences: “Fighting the war put many in the frame of mind that they were sacrificing for a much larger goal of winning the war, and people accumulated savings because there was not much they could buy at the time.”

        http://freakonomics.blogs.nytimes.com/2008/11/21/price-fishback-what-do-the-new-deal-and-world-war-ii-tell-us-about-the-prospects-for-a-stimulus-package/?scp=2&sq=global%20effects%20of%20world%20war%20two&st=cse

      • slrhbdavis,
        So true people are willing to suffer or do without for qood cause greater than themselves. The war gave a reason for the rationing , and lack of products,among other things. We as Americans have always believed in helping out a good cause and fighting for our freedoms.

    • Thanks!!

    • ric345:
      Good Article !! A picture says a 1000 words.

  3. Many people feel that the end to the Great Depression came about in 1941 with America’s entry into World War II. America sided with Britain, France and the Soviet Union against Germany, Italy, and Japan. There were many, many lives lost.

    The European part of the war ended with Germany’s surrender in May 1945. Japan surrendered in September 1945, after the U.S. dropped atomic bombs on Hiroshima and Nagasaki.

    American people got work through many programs and companies to support the U.S. war effort. This substantially helped America recover from the Great Depression.

    • In The Forgotten Man, chapter 15, although much of it focuses on Willkie’s campaign, it also touches on Roosevelt’s growing awareness that “…the United States must involve itself in Europe and that foreign policy had to do with growth at home.” (368)

      “But the real reason Roosevelt started to gain was the coming war. For one thing, it promised yet more spending. The Lend-Lease law would be passed only after the election, but both events and Willkie were already forcing Roosevelt in the campagin period to make clear that he would spend to defend the United States and to help its allies. The downturn was ending. Gross national product was finally approaching the level of 1929, though a comparison was misleading, for now the population was millions greater. The cotton crop for the year looked to be good again. And business activity picked up tremendously in prepartion for that spending. Even in World War I, government spending had had a tremendous influence. Business knew that if government was already bigger by so much than it had been in the 1910s, then a coming war would only increase its scale more.” (377)

      • ric345:

        I enjoyed this posting especially all of the comments that were made.

        The atlantic.com had a section that says, “the interesting thing though” and it talked about “if you want government spending to the solution to the great depression”- we would hope Matt to be wrong because of the timing not backing up the belief. The dates provided about the deficits and how they attempted to contradict the government was also very interesting

  4. This link listed below indicates the controversy/discussion if the World War II did end the Great Depression?

    http://meganmcardle.theatlantic.com/archives/2009/02/did_world_war_ii_end_the_great.php

    • ric345:

      (sorry posted to wrong one)

      I enjoyed this posting especially all of the comments that were made.

      The atlantic.com had a section that says, “the interesting thing though” and it talked about “if you want government spending to the solution to the great depression”- we would hope Matt to be wrong because of the timing not backing up the belief. The dates provided about the deficits and how they attempted to contradict the government was also very interesting

  5. This article by John Tamny contends that WWII did not contribute to the end of the Great Depression.
    http://www.realclearmarkets.com/article/2009/06/world_war_ii_did_not_end_the_g.html

    Tamny argues “the war likely helped, but unemployment was already falling by 1939, and with FDR’s legislative assault effectively over with, productivity was set to resume either way.”

    Shales suggests that Roosevelt needed to partner with big business to ensure that the economy was strong to support the war effort. On page 378, “In the war, Roosevelt needed a picture of a self-reliant United States, not a weak one. If that meant changing the New Deal, well, of course he would change it.”

    As government intervention became less, more jobs were available in the private sector, production increased, and federal revenues increased. Tamny argues that the ending of the New Deal was more a factor in ending the Great Depression than WWII.

    • cjm1406- your right this link brings out some arguments about the ending of the New Deal was more a factor in ending the Great Depression than WWII.

      The link I posted:
      http://meganmcardle.theatlantic.com/archives/2009/02/did_world_war_ii_end_the_great.php

      brings out similiar points of views to yours.

      • It is a proven fact that a war will stimulate a country’s economy. The debate is endless about how and why and when, but gearing up for war, waging war, and maintaining a military presence creates jobs.
        “War trumps everything–economics as well as politics.” (The Forgotten Man, 381).
        Wars provide jobs.

      • All of these articles do make good arguments, but it is horrible that the thought of going to war and taking human lives is a way to stimulate an economy.

    • After reading the texts I would have to agree with the argument that once the bulk of the New Deal programs ended private industry was able to fill the void they left, which allowed for true employment. The best part of private industry supplying real employment was that government spending, except for the war effort, would have naturally dissipated. Unfortunately, once you let the genie out of the bottle it’s hard to put it back.

    • cjm1406,

      Your article says that government intervention was basically the reason for decreased unemployment and an increase in production. Do you personally feel that this is what the current economy needs? It worked 60 years ago.

  6. A video explaining the “Broken Window Fallacy”

    Also an article explaining the “Broken Window Fallacy”. Simply put, it says wars are not good for the economy.

    http://economics.about.com/od/warandtheeconomy/a/warsandeconomy_2.htm

    • This video raises some valid points. We need all of those people who do those jobs……..

    • Excellent points in the video. Thanks for sharing.

    • 1soxnut,

      I liked this video. I understand the point they are trying to make with the Broken Window Fallacy. I can begin to agree with the economists that feel that the government is taking money from the taxpayers to pay for the planned projects. However, the second world war created jobs paid for by countries in Europe. Although the Lend-Lease Act promised payment for later, the money was returned. I do not see how war cannot help the economy. It is easy to say now, since the United States is suffering.

  7. John Stossel knows how to break it down and lay it on the line. It reminds me that numbers can be made to work for the outcome that you want. Many people are tired of the spin that is put on political and economical issues. It is one of the reasons that the public distrusts anything being said. Everyone has an agenda. Roosevelt did, too.

    • cjm1406-yes you are right!

    • The media is as much to blame as the politicians – in my opinion. They put just as much spin on things to try and get their point of view across. I was once told that to get a true unbiased view of the U.S., through the news, to watch BBC News. They have nothing invested and can report just the facts. Maybe politicians should take note.

      • Have you watched or listened to BBC news. I haven’t it would never have occurred to me that another country’s news would be a better source for American news. I will look into it to see for myself.

      • catstd:

        I did watch it once. They had nothing about the U.S. on their broadcast. Must have been nothing worth while going on here. lol

    • cjm1406:

      I agree!! Everyone has an agenda!!

  8. There’s really no denying that, at the time, the war effort gave many many people a chance to put aside their own problems to support the country in fighting. The government had been trying to put people back to work for years now, and it has also been trying to boost morale that had fallen low. It’s hard to get people back up and running when they’ve been at a stand still for 10 years. While the end of the Great Depression did have some of FDR’s programs to thank (deficit spending, putting money back into circulation by going off the gold standard, work programs), the war seemed to be the final piece of the puzzle that got the machine going again.

    • FDR’s Folly raises a critical point for thought:
      “A faster, sustained business recovery might well have changed history for the better. Imagine how the dramatic success of a prosperous America, during the 1930s, would have undermined political support for socialism, communism, and Nazism in other countries.” (268)
      Think about this for a minute…perhaps the Great Depression had even greater ramifications than we thought. If FDR had been able to “generate economic recovery during this critical period”, could it possibly have weakened, and perhaps even discouraged foreign aggressors who preyed on economic weakness and depressed nations world-wide? If the United States had been prosperous and strong, well-respected both economically and politically by other nations, is it not possible that Hitler’s communism would not have had the conditions necessary to ripen…and World War II might never have happened?
      Wow.

      • Now that is an incredible point of view. Had the U.S. and the world recovered more quickly from the Great Depression, where might be be today? Where would we be economically, socially or politically? What would the world look like if prosperity had occurred in the 30s? What would the political landscape look like today if the U.S. had not benefited from the victory of war?

      • Yes I also agree that is a incredible points to bring out from both of you!

      • This is true… If the Treaty of Versailles hadn’t been written as to totally punish Germany for WWI and because of this ruined their economy would Hitler’s party even had a leg to stand on? I think they would have still been a strong faction but would the impact on the German national psyche have been as strong if people were not starving in the streets?

        The following website goes back a bit on German economy but the paragraph of interest is about three-fourths the way down the page:
        http://countrystudies.us/germany/135.htm

      • You bring forward a very good point. If we were a stronger (financially) nation would we have been attacked at Pearl Harbor? There is something to be said for the psycological fear a “Super Power” has, especially if they can back it up economically.

        Another thought is that if the U.S. was not as strong financially and dominant in the world would we have been attacked on 9-11?

      • 1soxnut:

        Very good question about 9/11- I personally feel that 9/11 occured because they feel that we are “too free” and “untouchable” as a nation!!

        Just my own perspective!!!

      • megamuphyn,

        Thanks for the link. I think it is sadly amazing that at the beginning of the first world war, Germany was “prosperous”. And at the end of the second world war, Germany was in “ruin”.

  9. On the domestic front, WWII ended the Great Depression because thousands of Americans enlisted in the military, and those that could not serve worked in the defense industries. Women could now earn wages, and became critical to the war effort and national economy. WWII also saw significant strides made by African Americans who would begin to gain their economic and political rights.
    Just as importantly, WWII ended our isolation from the rest of the world.
    http://www.nps.gov/archive/elro/glossary/world-war-2.htm

    • This also raises some very good points about that timeframe regarding women and African Americans.

    • Here is a video that shows the bombing of Pearl Harbor. After this, Roosevelt signed a Declaration of War against Japan.

  10. “Since the creation of this great country, a debate has raged back and forth whether to remain in a bubble on our separate continent from the rest of the world and to remain neutral, or to become involved in world affairs, and thus gain prestige, or destruction. Since World War II, the United States has increasingly “meddled” in the affairs of other nations, such as many Latin and South American countries, the Middle East, and Vietnam to name a few. Now, there is little of this non-intervention sentiment in the United States. Leading up to World War II, though, was the period of perhaps the greatest anti-war surge in the United States.”
    “Isolationism, the term for this anti-war sentiment, was led by many congressmen and other influential people, such as the well-known Charles A. Lindbergh. They did not want America drawn into another World War, and so created the Neutrality Acts to punish warring nations. Roosevelt struggled greatly against Isolationism, but vowed to the American people that he would never send their sons into war, a promise that was soon broken. When England was under attack from the Germans, Roosevelt convinced the American people to push aside Isolationism and give the British greatly needed war materials under the Lend-Lease Act. When Jewish refugees fleeing Nazi persecution fled to the United States on the S. S. St. Louis, they were rejected and sent back because of the United States’ 1924 immigration policy limiting immigration from Eastern and Southern Europe. The anti-war sentiments were nudged along by the Germans, who funded many congressmen to continue lobbying for Isolationist views. Isolationism in American influenced American policy in the late 1930s and early 1940s and greatly delayed its entry into World War II.”

    http://www.harwich.edu/depts/history/HHJ/iso.htm

    • I found an interesting article that claims that 1940 was basically the end for isolationism for the United States.

      “The isolationist point of view did not completely disappear from American discourse, but never again did it figure prominently in American policies and affairs. Countervailing tendencies that would outlast the war were at work. During the war, the Roosevelt administration and other leaders inspired Americans to favor the establishment of the United Nations (1945), and following the war, the threat embodied by the Soviet Union under Joseph Stalin dampened any comeback of isolationism.

      http://www.u-s-history.com/pages/h1601.html

      Considering that international trade is absolutely essential to the quality of living in the United States today and the economy that supports it, it makes sense that being more involved internationally would have been a key turning point to the end of the Depression.

      • Racheal,
        Great point about isolationism and globalization. Trade is very important for all the world economies.

  11. Joe Johnson argues that war is never good for the economy and was in a very small part a reason for the end of the depression.
    He states that the products produced for war bring in no monetary value. A rocket blows up the target but that does not add money into the coffers.
    He says that war helping the economy is a myth. Businesses lose workers, production cannot be met, and debt for the small businesses increases.

    “Well, in one sense, the war is great for the economy, or at least until the well runs dry and the bill man says enough, time to pay-up. Then, taxes go through the roof and government spending must come to a halt. Which means that demand for products plunge, businesses have to slash expenses, unemployment skyrockets, and the dominos began to fall on each other. Then, you have a recession or even a great depression.”

    Then we go looking for another war to get us out of the economic troubles. Each time adding to the debt.

    http://www.wnd.com/index.php?fa=PAGE.view&pageId=16942

    • This is a very powerful statement……..”Then we go looking for another war to get us out of the economic troubles. Each time adding to the debt”. This is very true!

    • catstd:

      Very good article and I love his insight!!
      Joe Johnson also said that: “Whenever we have gone to war, especially in World War II, our economy has improved. If it wasn’t for World War II, we may still be in an economic depression.” While within this statement about WWII specifically there is a small shred of truth, the statement doesn’t apply broadly to war in general.

      He also says that the demand for goods and services goes up because the government starts a spending reaction. He talked about how investors know this and start to invest more. Then the stock market starts to go up and it seems everyone is happy. Thus the myth “war is good for the economy.” So, in the midst of our current economic woes, war with Iraq will be a boon for our economy, right?

      He talks about the bill from the war- he is right someone has to pay for it- will it be us- yes!! He made me think about the money that was spent looking for Sadam.- He is warning us.
      I do agree with him that after a while we do get sick of all our economic troubles, but when he said that we go off looking for a war, especially the year before re-election. That statement really made me think.

      • Kim,
        In The statement Johnson made about going and looking for another war. Is it really to help boost the economy or just another way to bring the American people on board for the sake of the cause. World freedom for all people seems to be the call. Who gets to foot the bill for the American troops policing the world? We do. Our children and grand children. When will some of the other countries step up and foot the bill. Or is there even a need for them to since we jump in first. It give me something to think about too.

      • Does this cycle hold true now? We are fighting two wars on two different fronts but how much impact has this had on our economy? We didn’t have factories gearing up and shipping out large amounts of new military equipment at first. It seems only recently that defense contracts are being renewed or expanded but it’s not really large-scale manufacturing is it?

        This one article from the New York Times does have an illustration of how it seems private industry is having to do quite a bit of behind-the -scenes investments to even attract government spending:

        http://www.nytimes.com/2009/11/19/business/smallbusiness/19edge.html?_r=1

        So there is money being circulated but not nearly in the amount generated by previous wars. Or at least that’s my impression.

      • Catstd:

        With the statement that Johnson made about looking for another war-he gave me the impression that it was said for “economic reasons”!!

        You made a good point-when will the other countries step up?? I sometimes think of the U.S. as “dippers” always dipping in other countries business (not to offend anyone). One year when my husband and I went to Jamaica for a week w/one of my friends for her wedding. The price of gas there was about 38 cents U.S. dollars per gallon, so I was making a joke to my husband saying that we need to take some home (this is when gas was hitting $5/GAL). So the tour guide says to me, “only you Americans will pay so high for gas because your government tries to control the world” and he laughed.

        We are spending money helping to feed and build a country that we are at war with and we have homeless people right here in America. I remember in one of my classes and I will have to find the facts behind it where we discussed how we are using our money to rebuild Iraq.

        This article will talk about all the money we have spent and how the Iraqis call it “wasteful”!!
        http://www.nytimes.com/2009/11/21/world/middleeast/21reconstruct.html

        Here is another interesting article when the Bush Administration cancelled some of Iraq’s debt:

        http://www.cnn.com/2004/WORLD/meast/12/17/iraq.main/index.html

    • megamuphyn,

      Good point about the amount of money circulating from both wars and the private industry looking for military contracts.
      Thanks

  12. The war effort contributed the end of the Great Depression and evidence of that was that The United States enlisted more than 10 million men and women into the military. According to this website (http://www.museum.siu.edu/museum_classroom_grant/Museum_Explorers/school_pages/bourbonnais/page6.htm) since there were so many fighting in the war, those left at home had to work in the factories to make supplies for the war effort.
    They claim that the desperate need for soldiers, pilots, and workers who made the ammunition, weaponry, air and sea craft all contributed to the end of the Great Depression. The economy of America skyrocketed and was on the road to restoration.

  13. I also think that World War II contributed to ending our Depression in that we were the only industrialized nation left after the conflict. Everyone had to come to us to buy goods and had to borrow from us to pay for it.

    The war did stimulate the economy and Keynesianism did win out in the short term. If a nation is motivated to fight against an aggressor like Japan or Germany, for a while they will be willing to give up economic freedoms, and yes the spending of govt will lead to jobs.

    Unfortunately, no one wants to be in a war-time economy for enternity. Thus, this kind of Keynesian policy is not sustainable.

    Below is an article that describes how the war really contributed to creating the appearance that the economy had improved. http://www.antiwar.com/henderson/?articleid=8727

    • Also consider all of that ‘pent up’ consumer demand that was unleashed after the war. There was such a boom in housing, cars, electronics and many other sectors.

      If you haven’t already seen this in one of my live classes, set aside about 20 minutes this weekend and watch this compelling video. While I do not agree with 100 percent of what is presented, there are some strong points made about externalities, resource management, conspicuous consumption and climate change.

      Consider the consumer economy that developed after WWII. Was the fantastic growth in consumption just a function of pent up demand, or was it planned?

      From Wikipedia: “Victor Lebow was a 20th century economist and retail analyst, perhaps best known for his quotation regarding the formulation of American consumer capitalism found in his paper “Price Competition in 1955″ (Journal of Retailing, Spring 1955). Modern authors disagree as to whether Lebow was encouraging and prescribing conspicuous consumption or grimly acknowledging and critiquing its prevalence among American consumers.”

      • It makes me stop and think about all the jobs and people each product I buy. We are so driven to have the newest and best. But we as consumers are being forced into it also. Take for example children’s bicycles. When I was a child we oiled the chains, tightened the brakes, and adjusted the gears,and seat. If a part rusted or worn out we could buy a new one to replace ourselves. We spent many pre-spring days spiffing up our bikes for the coming season. Fast forward a few years. I bought new bikes for my sons. The brakes went out. I went looking for the replacement parts. They are not made to be repaired. You are supposed to go out and buy a new one I was told by the salesman. Not everyone can afford to replace a bike every year. I found a bicycle repair man in the neighborhood. His yard was full of old bikes. He would take the parts from one bike in order to repair another. He saved me so much money. But I was disappointed that I couldn’t pass on the skill of bike repair to my children.
        We found a thrift store that traded bikes. You could bring in the used bike and trade it towards another used bike. My boys had drove the best and newest models of BMX racing bikes for a fraction of the cost of purchasing one brand new. Once tired of the current model it could be traded in for a different one. As a single parent this sure helped out the budget. They then learned how to tear the bikes apart and rebuild them into what they wanted. I think with forced and planned obsolescence children are missing out on valuable life skills. They then grow into helpless adults who have not learned simple repair tasks.

      • In regards to this video posted — I believe that the growth in consumption was a combination of the pent up demand and part of it was planned.

    • This does bring out some points regarding creating the appearance that the economy had improved. Is this what is portrayed in the media these days?

      • I am convinced that many of the news stories are to shore up confidence in the economy. Especially this Christmas season it is very vital for retailers to have a good profit margin. Many businesses are hurting and teetering on the brink of bankruptcy and closing their doors forever.
        Some may call me pessimistic but I think things are not as good as we are being led to believe. It goes back to several posts from weeks past when the economist said belief in the dollar is what keeps things going.

  14. I found an interesting article about war bonds, and I began to wonder how war bonds actually helped the government? Basically, it was money that had been pumped into the economy to get things rolling again that the government was buying back? They were tools to prevent rising inflation by soaking up some of the money supply, so I’m assuming that that money was put back into the Treasury to fund the war effort. Did this do anything to help end the Depression? Just wondering.

    http://www.u-s-history.com/pages/h1682.html

    • I am sure it helped the depression. Here is a blog that explains what your article states:
      http://www.greenbonds.com/2009/02/24/war-bond/

      From what I understand the money from the sale of the bonds was used for military expenses. I was unable to find any proof of this. I would guess that if money was raised for military expenses then other money could be spent elsewhere.

      I had savings bonds since I was born. They were gifts from an aunt and uncle every birthday and christmas. Most were a 10year maturity. I remember cashing them when I turned 18. A couple still were not fully matured. Some were E Bonds. Now knowing that E Bonds were used in WWII I would probably have kept them. (Even though they werenot trule war bonds)

      • My children were each given savings bonds at birth and then cashed them in on their 18th birthday. We used to have them taken out of our checks. they came in handy when we needed some extra cash for emergencies. They could be cashed in early before they reached maturity.

    • Thanks for this post I always wondered how the war bonds worked and what they were used for. There has been a lot written about the bond rallies. But not so much about how they helped the war effort.


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