T6 Economic

Question 1

Roosevelt’s Aims (The Three R’s)

Answer 1

Relief- For the worst suffering
Recovery- To get farmers & industry back on its feet & find full economic recovery ending all unemployment
Reform- To make sure it never happens again, reforms are needed in banking, Trade Unions & State Welfare

Question 2

Roosevelt’s First Hundred Days

Answer 2

-First speech to nation announced a whirlwind of economic interventionist policies
-Lived up to his promised & by 15th June 1933 he pushed through 15 new laws
-New York Exchange suspended trading on the day of his inauguration
-Began by FDR calling a special session of Congress
-Was given plenty of advice from economists & financers but did not follow it
-His instincts were intensely political & was determined to make an impact by taking bold action
-Reality his policies were not as they seemed, with many already being planned by Hoover

Question 3

Emergency Banking Relief Act (March 1933)

Answer 3

-6th March 1933 Roosevelt closed all banks in the country for 4 days to give treasury officials time to draft emergency legislation
-Act passed by Congress after 40 mins of debate
-Aimed to restore confidence in American banking system
-Gave Treasury power to investigate banks threatened with collapse
-Reconstruction Finance Corporation was authorised to buy stock to support them & to take on their debts
-RFC became largest bank in world
-FDR appeared on the radio, fireside chats
-Explained the nature of the crisis & how they could help
-‘place your money in the bank not under your mattress’
-Solvent banks were reopened & others were reorganised by government officials
-April, $1 billion had been returned to bank deposits & crisis was over

Question 4

The Glass-Stegall Act (June 1933)

Answer 4

-FDR drew up legislation to put banking system on a sounder long-term footing
-Commercial banks relying on small-scale depositors were banned from involvement in the type of investment banking that fuelled speculation of the 1920s
-Bank officials not allowed to take personal loans from their own bank
-Authority over open-market operations like buying & selling government securities was centralised by being transferred from Federal Reserve Banks to Federal Reserve Board in Washington
-Individual bank deposits were to be insured against bank failure up to $2,500, insurance fund administered by Federal Deposit Insurance Corporation (FDIC)

Question 5

Regulation of the Stock Exchange

Answer 5

-Ensure excess of the 1920s were not repeated
-The Truth in Securities Act (1933): Required bankers to offer clients realistic information about securities they were selling
-The Securities Act (1934): Set up the Securities Exchange Commission (SEC), tasked to oversee stock market activities & prevent fraudulent activities

Question 6

The Federal Emergency Relief Act (May1933)

Answer 6

-Established Federal Emergency Relief Administration (FERA)
-Given $500 million to be divided equally among states to help provide for unemployed
-Half the money spent of states for relief, other half government would pay each state $1 for every $3 it spent on relief
-Harry Hopkins ran programme
-Said each state should set up FERA office & organise relief programmes
-Raise money through borrowing, tax rises or any other means
-Many states were wedded to the idea of a balanced budget and found expenditure on relief extremely distasteful.
-It was still felt by many that to be poor was your own fault. Those requiring relief were often not
treated well. In many places there could be interminable waits and delays.
-In the face of such opposition, FERA’s effectiveness was limited. Its workers were refused office space in some states and often their caseloads were numbered in thousands.
-Its funds were limited, too. In 1935, it was paying about $25 per month to an average family on relief, while the average monthly minimum wage for subsistence was estimated at $100.
-However, although its effects were disappointing, it did set the important precedent of federal government giving direct funds for relief.

Question 7

The Civilian Conservation Corps (CCC)

Answer 7

• Unemployment among young people was a huge problem and Roosevelt understood they needed a special programme to afford them both the experience of work and useful training in community
  service, co-operation and other skills essential to their growth as useful citizens.
• Unemployed young men between the ages of 17 and 24 (later 28) were recruited by the Department of Labor to work in the Civilian Conservation Corps (CCC) in national forests, parks
  and public lands.
• The Corps was organised along military lines, but its tasks were set out by the Departments of the Interior and Agriculture.
• The CCC was originally set up for two years, but Congress extended this for a further seven years in 1935, when its strength was increased to 500,000. In the period of its life, the CCC installed
  65,100 miles of telephone lines in inaccessible areas, spent 4.1 million man-hours fighting forest
  fires and planted 1.3 billion trees.
• The CCC gave countless young men, particularly those from the cities, a new self-respect and valuable experience of both comradeship and life in the ‘great outdoors’.

Question 8

The Agricultural Adjustment Act (May 1933)

Answer 8

• Overproduction had been the greatest problem of American agriculture.
• The main principle behind the Agricultural Adjustment Act was that the Government would subsidise farmers to reduce their acreage and production voluntarily.
• By producing less, the cost of food would increase, and so would farmers’ incomes.
• A new agency was set up called the Agricultural Adjustment Administration (AAA).
• It would pay farmers to reduce their production of ‘staple’ items, initially corn, cotton, milk, pork, rice, tobacco and wheat.
• The programme was to be self-financing through a tax placed on companies that processed food.
  It was assumed that these companies would in turn pass on the increased cost to the consumer.
• Reduction of cotton production was perhaps the most pressing need.
• At the beginning of 1933, unsold cotton in the USA already exceeded the total average annual world consumption of American cotton.
• Moreover, farmers had planted 400,000 acres more than in 1932.
• They were, quite simply, paid to destroy much of this. A total of 10.5 million acres were ploughed under, and the price of cotton accordingly rose from 6.5 cents per pound in 1932 to 10 cents in 1933.
• However, it was one thing to destroy cotton but it was far more contentious to destroy food when so many Americans were hungry.
• Six million piglets were bought and slaughtered. Although many of the carcasses were subsequently processed and fed to the unemployed, the public outcry was enormous.
• In fact, the AAA destroyed only cotton and piglets.
• Drought helped to make the 1933 wheat crop the poorest since 1896, and agreements were reached to limit acreage in other crops in subsequent years.
• Total farm income rose from $4.5 billion in 1932 to $6.9 billion in 1935.
• The percentage of farmers signing up for AAA agreements was high at first – 95 per cent of tobacco growers, for example – and the Act was very popular with farmers.
• Faced by drought, Western ranchers sought to bring beef cattle under the protection of the AAA in 1934.
• By January 1935, the Government had purchased 8.3 million head of cattle, in return for which ranchers agreed to reduce breeding cows by twenty per cent in 1937.
• Overall, it would appear that the AAA worked effectively to deal with the crisis of overproduction, although there were problems.

Question 9

The Tennessee Valley Authority (TVA May 1933)

Answer 9

• The TVA was set up to deal with the underdevelopment and poverty in the Tennessee Valley.
• The TVA was one of the most grandiose schemes of the New Deal.
• It was created to harness the power of the River Tennessee, which ran through seven of the poorest states in the USA.
• It was hoped that by so doing this region of 80,000 square miles with a population of 2 million people would become more prosperous.
• To construct twenty huge dams to control the floods that periodically affected the region.
• To develop ecological schemes such as tree planting to stop soil erosion.
• To encourage farmers to use more efficient means of cultivation, such as contour ploughing.
• To provide jobs by setting up fertiliser manufacture factories.
• To develop welfare and educational programmes.
• Most significantly, perhaps, to produce hydro-electric power for an area whose existing supplies of electricity were limited to two out of every 100 farms.
• The TVA effectively became a central planning authority for the region.
• It was largely responsible for the modernisation and improved living standards that saw its residents increase their average income by 200 per cent in the period from 1929 to 1949.

Question 10

The National Recovery Administration – (NRA June 1933)

Answer 10

• The NRA was set up to oversee industrial recovery.
• Headed by General Hugh Johnson, it seemed to offer something to all groups involved in industry.
• Powerful businessmen, for example, benefited from the suspension of anti-trust legislation for
  two years.
• The argument behind this was that if industrial expansion was to be promoted, it was crazy to
  maintain laws that restricted it.
• Firms were encouraged to agree to codes of practice to regulate unfair competition such as price
  cutting, and to agree on such matters as working conditions and minimum wages in their industry.
• Ultimately the codes did not help economic recovery.
• This led Johnson to attempt a ‘Buy Now’ campaign in October 1933 to encourage people to spend
  and therefore stimulate production.
• He also advocated an overall ten per cent wage increase and ten-hour cut in the working week. Neither was successful.
• In reality, the NRA codes looked impressive, but they could not bring about an economic recovery.
• Many critics argued that, in practice, they did little except give large firms the opportunity to indulge in unfair practices – the very opposite of what had been intended.
• The Supreme Court dealt the death blow in May 1935 when it declared the NRA unconstitutional.

Question 11

The Public Works Administration (PWA – June 1933)

Answer 11

• The second part of NIRA set up an emergency Public Works Administration (PWA) to be headed
  by the Secretary of the Interior, Harold Ickes.
• It was funded with $3.3 billion, and its purpose was ‘pump-priming’.
• It was hoped that expenditure on public works such as roads, dams, hospitals and schools would
  stimulate the economy.
• Road building would lead to increased demand for concrete, for example, which would lead the concrete companies to employ more workers, who would therefore have more money to spend, and so on.
• Eventually the PWA put hundreds of thousands of people to work, building, among other things, nearly 13,000 schools and 50,000 miles of roads.
• It pumped billions of dollars into the economy and was responsible for massive public works schemes, particularly in the West, where it enabled dams to be built to help irrigate former semi desert land, electricity to be produced and four vast National Parks to be created.

Question 12

The Civil Works Administration (CWA – November 1933)

Answer 12

• A further measure to create employment was the Civil Works Administration (CWA).
• This agency was created in November 1933, with a $400 million grant from the PWA, primarily to provide emergency relief to the unemployed during the hard winter of 1933 – 1934.
• Although it put 4 million people to work on public works projects, it was closed down in March when the winter was over. However, FERA agreed to fund more public works projects itself.
• Despite the fact that many jobs’ agencies such as the PWA were created, unemployment and attendant social problems persisted, and the Federal Government had to turn to relief measure.

Question 13

The Second New Deal (1935–1937)

Answer 13

• Many historians have argued that the New Deal seemed more radical in the years after 1935, with
  Roosevelt genuinely trying to favour the poorer classes at the expense of the rich.
• They point in particular to the measures that made up the Second New Deal as evidence of this,
  such as the introduction of social security and the legalisation of labour unions.

Question 14

Reasons for the Second New Deal Roosevelt

Answer 14

• The climate in the new Congress was for action and Roosevelt wanted to prevent this. He did not
  wish to surrender the initiative in preparing New Deal legislation.
• Roosevelt was increasingly frustrated by the Supreme Court, which was beginning to overturn
  New Deal legislation. He believed it was opposing him. This in itself made him more radical in
  outlook.
• Roosevelt was also increasingly frustrated with the wealthy and with the forces of big business,
  who were opposing him more and more. He was particularly angry when the US Chamber of
  Commerce attacked his policies in May 1935. He believed he had been elected to save American
  business and he felt let down by its lack of continued support.

Question 15

The Works Progress Administration (WPA –(May 1935)

Answer 15

• The WPA recruited people for public works projects.
• At any one time it had about 2 million employees and, by 1941, twenty per cent of the nation’s
  workforce had found employment with it.
• Wages were approximately $52 per month, which was greater than any relief but less than the
  going rate in industry.
• The WPA was not allowed to compete for contracts with private firms or to build private houses.
• However, it did build 1,000 airport landing fields, 8,000 schools and hospitals, and 12,000
  playgrounds.
• Although it was not supposed to engage in large-scale projects, it did so.
• Among other things it was responsible for cutting the Lincoln Tunnel, which connects Manhattan
  Island to New Jersey, and building Fort Knox in Kentucky.

Question 16

The ‘Wagner Act’ (July 1935)

Answer 16

• Roosevelt was reluctant to become involved in labour relations legislation. There are many
  reasons for this.
• There was a mistrust of labour unions in the USA. This was particularly the case among
  conservative politicians such as the Southern Democrats whose support he needed.
• He had no more wish to become the champion of unions than to upset big business further – and
  big business generally loathed unions.
• The Act guaranteed workers the rights to collective bargaining through unions of their own choice.
  They could choose their union through a secret ballot; and a new three-man National Labor
  Relations Board was set up to ensure fair play. Employers were forbidden to resort to unfair
  practices, such as discrimination against unionists.
• It was the first Act that effectively gave unions rights in law and in the long term committed federal
  government to an important labour relations role. However, Roosevelt still did not see it that way
  and preferred to continue to take a back seat in labour relations.

Question 17

The Social Security Act (August 1935)

Answer 17

• Provision made by states for social security was wholly inadequate.
• For example, only Wisconsin provided any form of unemployment benefit and this was to be paid
  by former employers as a disincentive to laying-off their workers.
• Roosevelt had long been interested in a federal system of social security.
• However, what he came up with was both conservative and limited in its provision.
• Certainly, it was not as generous as a proposal by Townsend, a critic of the New Deal, whose
  popularity was of concern to Roosevelt and many members of Congress.
• The Social Security Act was the first federal measure of direct help as a worker’s right and would
  be built upon in the future.
• The Act provided for old-age pensions to be funded by employer and employee contributions,
  and unemployment insurance to be paid for by payroll taxes levied on both employers and
  employees.
• While the pension scheme was a federal programme, it was anticipated that states would control unemployment insurance.
• However, the Social Security Act was generally inadequate to meet the needs of the poor.
• Pensions were paid at a minimum of $10 and a maximum of $85 per month according to the
  contributions that recipients had paid into the scheme.
• They were not to be paid until 1940 so everyone receiving them had paid something in. Unemployment benefit was a maximum of $18 per week for sixteen weeks only.
• Although the Social Security Act had serious flaws, it should not be forgotten that it was a major break with American governmental tradition.
• Never before had there been a direct system of national benefits.
• But it is important to stress that this was not relief. Roosevelt refused to allow general taxes tosubsidise the system.
• It had to be self-financing. Recipients had to pay into the system.
• The pensions were not paid at a flat rate but according to how much the worker had contributed
  previously.
• Unemployment benefits were low and paid for a very limited period.

Question 18

The Banking Act (August 1935)

Answer 18

• This Act was intended to give the federal government control of banking in the USA.
• The Governor of the Federal Reserve Board, Marriner Eccles, felt that Wall Street exercised too
  much power in national finance and sought to repeal the 1913 Federal Reserve Act, which
  governed the American banking system.
• The control of banking was removed from private banks to central government and the centre of
  financial management shifted from New York to Washington.

Question 19

Left-wing Opposition to the New Deal

Answer 19

• At the time, Roosevelt was more concerned about threats from the left.
• This was particularly because left-wing groups might join together to form a third party to
  challenge him in the next presidential election.
• The threats varied from those advocating radical schemes such as ‘Old Age Revolving Pensions Incorporated’ to popular leaders such as Huey Long and Father Charles Coughlin.

Question 20

(1) End Poverty in California (EPIC)

Answer 20

• The novelist Upton Sinclair came up with a scheme whereby the unemployed would be put to
  work in state-run co-operatives.
• They would be paid in currency, which they could spend only in other co-operatives.
• For a time, Sinclair’s ideas gained credibility and proved useful recruits for more serious
  alternative movements as discussed below.

Question 21

(2) ‘Share Our Wealth’

Answer 21

• In February 1934, Senator Huey Long from Louisiana moved onto the national scene with his ‘Share Our Wealth’ programme.
• He advocated that all private fortunes over $3 million should be confiscated and every family should be given enough money to buy a house, a car and a radio.
• There should also be old-age pensions, minimum wages so that every family would be guaranteed $2,000–$3,000 per year and free college education for all suitable candidates.
• Long’s ideas proved very popular and ‘Share Our Wealth’ clubs grew to 27,431 in number, with 4.6 million members spread across the states.

Question 22

(3) Old Age Revolving Pensions Incorporated

Answer 22

• Francis Townsend was a retired doctor who advocated old-age pensions with a difference.
• Everyone over 60 years of age who was not in paid employment should be given $200 per month
  on the understanding that every cent of it was spent and none saved.
• The idea was that this would boost consumption and thereby production and so pull the USA out
  of the Depression.
• Moreover, encouraging people to retire at 60 would provide more jobs for the young.
• Soon Townsend Clubs had 500,000 members and Congress was being lobbied to put the plan into
  operation.
• It was, of course, totally impractical. Payments to recipients would have amounted to 50 per cent
  of national income and an army of bureaucrats would have been necessary to ensure pensioners
  were spending all their $200.
• Nevertheless, the level of support showed that the movement had to be taken seriously.

Question 23

Right-wing Opposition to the New Deal

Answer 23

• Many of the wealthy, who had supported Roosevelt in the darkest days of the Depression as the
  saviour of capitalism, now turned against him when it seemed that capitalism had been saved.
• This was in part because of the increases in taxes, which they argued fell too heavily on them.
• They also tended to oppose what they perceived as too much government involvement in the
  economy.
• The Republican Party still associated with its failures during the early 1930s, was rebuilding and
  preparing for the 1936 election, but it was finding it difficult to field a strong candidate, which
  meant there was a lack of effective opposition to Roosevelt.
• Roosevelt also faced opposition from the Liberty League, which was supported by members of
  the Republican Party as well as his own party, the Democrats.

Question 24

(1) The Liberty League

Answer 24

• The Liberty League was organised in April 1934 by many conservative Democrats as well as
  Republicans to promote private property and private enterprise unregulated by law.
• The Liberty Leaguers attacked Roosevelt throughout the New Deal years and formed the basis of
  right-wing opposition to him.
• By July 1936, it had 125,000 members; after Roosevelt’s victory in the elections of that year,
  however, it became less significant.

Question 25

(2) Father Charles Coughlin

Answer 25

• Charles Coughlin was a priest whose radio programme, The Golden Hour of the Little Flower, was
  enormously influential during the first half of the 1930s.
• It regularly commanded an audience of 30–40 million, and listeners contributed more than $5
  million per year to his parish in Detroit.
• In 1934, Coughlin founded the National Union for Social Justice with the aim of monetary reform
  and redistribution of wealth.
• Roosevelt was afraid of Coughlin’s influence, particularly when a possible alliance with Huey Long
  was mooted.
• However, Long was assassinated, and Coughlin became increasingly anti-Semitic, blaming Jews
  for both the New Deal and control of Wall Street. This lost him significant support.

Question 26

(3) Republican and ‘Big Business’ Opposition to Roosevelt

Answer 26

• Roosevelt faced significant opposition from big business and wealthy people who increasingly felt
  the New Deal had gone too far.
• Some would not even say his name; they called him ‘that cripple in the White House’.
• Roosevelt himself said that everyone was against him but the electorate.
• However, the relationship with big business was always difficult.
• Roosevelt knew the economy could not recover without its support and big business may have
  feared the alternative had the New Deal failed completely.
• However, they hated the Revenue Acts which raised taxes and opposed what they perceived as
  ever greater government interference.
• Republican opponents in Congress were to be joined by more conservative Democrats who also
  feared the New Deal had gone too far.
• Roosevelt called for a special congressional session in November 1937 to pass various measures
  such as an anti-lynching bill, which had been delayed due to the debates on the Judicial Reform
  Bill. Not one was passed.

Question 27

Opposition of the Supreme Court

Answer 27

• Given Roosevelt’s flexible ideas on the workings of the Constitution, it was perhaps inevitable that
  he would come into conflict with its guardian, the Supreme Court.
• Although he had not directly attacked the Court during the election campaign, he felt it was in
  need of reform.
• While the Court had supported New Deal laws in the days of crisis, it had increasingly declared
  legislation unconstitutional as Roosevelt’s first term of office came to an end.
• In the 140 years before 1935, the Supreme Court had found only about 60 federal laws
  unconstitutional; in eighteen months during 1935 and 1936, it found eleven to be so.
• Indeed, on one day, ‘Black Monday’, 27 May 1935, the Supreme Court attacked the New Deal in
  several ways.
• For example, it found the Farm Mortgage Act unconstitutional. It argued that the removal of a
  trade commissioner, which Roosevelt sought, was the responsibility not of the president but of
  Congress.
• Most importantly, it found the NRA to be unconstitutional through the ‘sick chicken’ case.
• If the Federal Government could not prosecute individual firms for breaking the NRA codes, it
  followed that all the codes themselves must be unconstitutional.
• This was because they were developed by federal government but affected individual firms in
  individual states.
• The argument went that the executive had acted unconstitutionally in giving itself the powers to
  implement the codes in the first place.
• This was because it had no authority to intervene in matters that were the preserve of individual
  states.
• Given that the codes were at the heart of NIRA, it could not survive without them.
• More significantly, the ruling seemed to imply that the government had no powers to oversee
  nationwide economic affairs except in so far as they affected inter-state commerce.

Question 28

The Judiciary Reform Bill (1936) – FDR’s Threat to ‘Pack’ the Supreme Court

Answer 28

• Roosevelt believed the justices on the Supreme Court were out of touch. Of the nine judges, none
  were his appointments.
• He increasingly saw the issue of the Supreme Court as one of unelected officials stifling the work
  of a democratically elected government, while members of the Supreme Court saw it as them
  using their legal authority to halt the spread of dictatorship. The scene was set for battle.
• On 3 February 1936, Roosevelt presented the Judiciary Reform Bill to Congress.
• This proposed that the president could appoint a new justice whenever an existing judge, reaching
  the age of 70, failed to retire within six months.
• He could also appoint up to six new justices, increasing the possible total to fifteen.
• The measure had been drawn up in secret, although, ironically, the idea of forcibly retiring judges had first been proposed by one of the existing members of the Supreme Court in 1913.
• Roosevelt had stirred up a hornet’s nest. Many Congressmen feared he might start to retire them at 70 next.
• He had also greatly underestimated popular support and respect for the Court.
• In proposing this measure, Roosevelt was seen as a dictator. In July, the Senate rejected the Judiciary Reform Bill by 70 votes to 20.

Question 29

The Achievements of the New Deal

Answer 29

• Roosevelt spoke of the New Deal’s aims as ‘relief, recovery and reform’ and it is against these that its success should be judged.
• There has been much debate about the achievements of the New Deal, in particular how it extended the economic and social role of the Federal Government.

Question 30

Economic Effects of the New Deal

Answer 30

• Economic recovery was sluggish during the New Deal years, in part because many of its measures were contradictory.
• Roosevelt believed in a balanced budget. He was, therefore, reluctant to spend excessively on federal projects.
• He failed to see that massive government expenditure might be necessary to offset the reduction in spending in the private sector.
• This desire for a balanced budget led to a reduction of the budget deficit over the course of Roosevelt’s presidency. In 1938, the deficit was lower than the $2.5 billion deficit Hoover had run up in 1932 and over which Roosevelt had criticised him in the 1932 presidential election.
• The actual achievements of the New Deal were rather slender.
• The national total of personal income stood at $86 billion in 1929 and only $73 billion in 1939.
• This was despite a population increase of 9 million during the course of the decade.
• The Government seemed reconciled to a permanent unemployment figure of at least 5 million. Wages averaged $25.03 per week in 1929 and $23.86 ten years later.
• In 1933, 18 million Americans were unemployed. In 1939, 9 million were still out of work.
• While there was a reduction in unemployment in the early years of the New Deal, it may largely have been the result of people working in the alphabet agencies.
• The Roosevelt Recession of 1937 saw a return to higher unemployment with nineteen per cent of the workforce jobless in 1938.
• Most historians agree that the real reason unemployment fell was the amendment of the 1935 Neutrality Act in November 1939. This meant that belligerents could buy from the USA. Within a year there were orders for 10,800 aircraft and 13,000 aeroplane engines.

Question 31

Political Effects of the New Deal

Answer 31

• The New Deal was, when viewed as a whole, a programme of reform.
• The reforms were economic, political and social and transformed the national infrastructure of the USA.
• Economic reforms were mainly intended to rescue the capitalist system from its worst excesses and to provide a more rational framework in which it could operate.
• Roosevelt allowed labour unions to take their place in labour relations and reluctantly recognised that federal government had a role in settling industrial disputes.
• Reluctantly, Roosevelt came to realise that the expansion of government he had created was to be permanent. His attempted reform of the Supreme Court failed, but the Court nevertheless became more sympathetic to New Deal legislation, recognising the political realities of the later 1930s.
• The New Deal also saw an expansion in the functions of state and local government, for example in terms of welfare provision.
• The system became more modern and able to address the needs of citizens in the twentieth century.
• People increasingly expected that the government would take responsibility for their problems.
• The Social Security Act and the relief and job creation agencies expanded the role of government considerably.

Question 32

The WW2 Home Front Political Effects

Answer 32

• The Government took over more control of people’s lives.
• In 1940, the Smith Act had been passed which made it illegal to threaten to overthrow the
  government of the USA.
• Originally aimed at supporters of fascism, it later became associated with the attack on
  Communists.
• The Selective Service Act of the same year had introduced conscription.
• As the war developed the Office of War Mobilization was created to control the supply of goods
  and prices; the National War Labor Board set wages.
• The War Management Commission, set up in 1942, had to recruit workers where they were
  needed most.
• Moreover, the Office of Scientific Research and Development mobilised thousands of scientists to
  develop new methods of death, from bazookas to the atomic bomb, as well as new methods of
  saving the lives of those who were wounded in battle.
• The Office of Price Administration and Civilian Supply was set up in August 1941 to control
  inflation.
• In April 1942, it issued a General Maximum Price regulation which froze prices at March 1942
  levels to prevent inflation.
• It had the power to control all prices (except agricultural commodities) and ration scarce items.
• Eventually such items as petrol, tyres, coffee, sugar and other foodstuffs were rationed. Almost
  90 per cent of food items were subject to price controls.

Question 33

The WW2 Home Front Economic Effects

Answer 33

• Economically, the Second World War played a much greater role in economic recovery than the
  New Deal with nearly 9 million still out of work as late as 1941.
• Indeed, American involvement in war production made the New Deal irrelevant.
• Between 1941 and 1945, the USA produced 86,000 tanks, 296,000 aircraft and 15 million rifles.
• Farm income grew by 250 per cent. Unemployment effectively ceased by 1942; in 1944 it stood
  at 1.2 per cent, having fallen from 14.6 per cent in 1940.
• In 1944 alone, 6.5 million women entered the labour force; by the end of the war almost 60 per
  cent of women were employed.
• The number of African Americans working for the federal government rose from 50,000 in 1939
  to 200,000 by 1944.
• In the years between 1940 and 1944, 5 million African Americans moved to the cities where a
  million found jobs in defence plants.
• Gross National Product (GNP) meanwhile rose from $91.3 billion in 1939 to $166.6 billion by 1945.
• However, under the Office of War Mobilization, food prices and rents were strictly controlled.
• Some items such as meat, sugar and petrol were rationed, and the production of cars for ordinary
  motorists stopped entirely.
• While many consumer items such as clothes were made from far less material and became
  simpler in style and others disappeared from the shops, most Americans were comparatively well
  paid during the war and did not suffer the deprivations of those in other belligerent countries.
• Although prices rose by 28 per cent during the war years, average wages increased by 40 per cent;
  people may not have had much to spend these wages on but they could and did save.
• It was the spending power of these consumers that helped to fuel the post-war boom period.
• As a result of the costs of the war, the National Debt which stood at $41 billion in 1941 had risen
  to $260 billion by 1945.
• The federal government spent twice as much between 1941 and 1945 as it had before in 150
  years.
• Roosevelt hoped to pay for much of the war production by increased taxes.
• The highest earners paid 94 per cent tax.
• This gave a sense of greater equality.
• The poor grew more wealthy during the war years and the rich received a smaller proportion of
  national income.
• The Second World War brought enormous economic changes to the USA.
• Unemployment collapsed and the USA became an economic powerhouse.
• The government had direct control, unthinkable in previous periods.