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Us Economy During Ww2

Essay by 24  •  November 14, 2010  •  1,043 Words (5 Pages)  •  969 Views

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The Great Depression, which had an effect on economies on a global scale, was on of the catalysts to the start of World War II. With many countries struggling, Hitler managed to rise to power partially from his claims of the ability to change Germany into a great military and economic power. Across the ocean though, America was still mired down in the economic slump. President Roosevelt had enacted his New Deal economics and America seemed to be fighting back out of the depression, but it couldn't quite seem to get out. Despite the depression, when Germany invaded Poland in 1939, America was reasonably prepared for war thanks to programs and agencies set forth by the New Deal. The New Deal showed a larger and more active government in social and economic issues.

When the war spread through Europe and Asia, it became clear to the American government that they needed to prepare themselves to strengthen allies and prepare for war. Conversion became one of the biggest issues in the early 40's. The government sought to convert industries over to war production, but many company executives fought the conversion for fear of losing consumer market shares to their competitors who weren't converting. Conversion was advocated by many public officials and labor leaders. The auto industry was converted over to aircraft production by 1942, and became making significant contributions to the war by the next year. The merchant shipbuilding industry was quickly and efficiently converted thanks to a New Deal agency that had been established to revive the shipbuilding industry. The U.S. Maritime Commission (USMC) was created to ensure the American shipyards could meet wartime demands. Shipyards were able to expand across the country thanks to their government funding. 71 ships had been produced in a six year span between 1930 and 1936. In the two years from 1938 to 1940 shipyards produced 106 ships, and that many were almost produced in 1941 alone. This amazing growth was important due to the strategic importance of the shipbuilding industry. Supplies needed to be shipped to overseas allies and America needed many more ships to do this. The attacks on Pear Harbor also contributed a huge movement of conversion in America. The formal declaration of war on Japan and Germany meant that America needed to prepare itself even further for war. It needed to transform itself into what Roosevelt had called "the Arsenal of Democracy."

Many of the American ships being built by USMC shipyards supplied goods to European allies as part of the Lend-Lease program that was instituted in 1941. The Lend-Lease program strengthened Great Britain and the Soviet Unions ability to fight the Axis. Between 1941 and 1945 the U.S. exported $32.5 billion worth of goods through Lend-Lease. The majority of these were aircraft, ships, military vehicles, and munitions, but food was also a major export.

With the entry of America into the war, it was realized that the government needed an effective administration to continue. American officials realized that they needed to take a more active role in controlling U.S. production. Mobilization agencies were created to not only buy goods or arrange their purchase by the Army and Navy, but they also often closely directed the production of these goods. One way to see this sharp increase in federal and military spending is to look at the nations GDP at the time. In 1940 the nations GDP was 101.4. Federal spending accounted for 9.34% of that. Of the federal spending, 17.53% of it was spent on defense. By 1945 the GDP had rose to 173.52 and federal spending had become 41.56%. Defense spending accounted for 89.49% of the federal spending.

The Department of the Treasury was also very successful in finding ways to fund the war. The income tax was extended to nearly all Americans, and the method of continual withholdings

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