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Economy in World War II: Home Front

The New Deal's Shortcomings

In 1939, the United States was still ensnared in a severe economic depression, one that crippled the nation for a full decade. President Franklin D. Roosevelt's New Deal experiments had brought some relief to a population reeling from unemployment, inflation, and scarcity, but considerable transformations—vast federal spending, price regulations, job placement, the expansion of unions, greater access to home loans, social security for the elderly and disabled, and the public's restored confidence in their government—did little to bring prosperity to the American people.

Across the board, little changed. By the end of the 1930s, 17% of the American work force remained unemployed; 30% still lived in poverty; and the most needy and least organized citizens, such as domestic workers, sharecroppers, new immigrants, blacks, and unmarried women, reaped few of the New Deal benefits. FDR's great experiments, then, did not end the Great Depression. Only mobilization for a world war would bring an end to the most devastating economic crisis in United States history.

Revving Up a Wartime Economy

In late 1939, a full two years before the United States entered World War II, President Franklin D. Roosevelt decided it would be necessary—and perhaps wise—to invest time and money into national defense. Despite his promise to keep the nation out of the war escalating abroad, Roosevelt carefully and deliberately prepared the country for a worst-case scenario. By the spring of 1940, he convinced Congress to increase defense spending, enlarge the army, and expand the U.S. military air fleet. Through billions of dollars in federal spending—largely focused on rearmament and national security—he managed to funnel money into a peacetime draft, increase wages for military personnel, offer subsidies for defense manufacturing, and grant loans to aid Great Britain and the Soviet Union. (Not exactly invoking neutrality in his decision to assist the Allied powers, President Roosevelt noted, "Even a neutral cannot be asked to close his mind or his conscience."13) When Japanese bombers attacked Pearl Harbor in December 1941 and the United States became embroiled in world war, the nation was revved for the challenges ahead.

Help Wanted!!

By the first years of American involvement in World War II, wartime manufacturing facilities had been established throughout the nation, creating a tremendous demand for labor. Within months of the U.S. declaration of war, the national unemployment rate plummeted an astounding 10% from its 1940 level. War mobilization—that is, the rapid production of military equipment, vehicles, weapons, and ammunition, along with the fortification of American borders and military bases abroad—coupled with the military draft to create a vast labor shortage. Employers were desperate to fill positions as quickly as possible to meet production demands and needed to hire workers en masse. Positions, then, had to be opened not simply to the traditional labor force, but also to women and non-whites, those who had long been excluded from many skilled and high-paying industries.

The demand for labor was so great all across the nation that proprietors had to offer high wages and other fringe benefits to lure potential laborers—young, old, married, unmarried, white, black, immigrant, and women—away from competitors. Businesses practically begged for workers, offering extraordinary incentives such as medical care, exemption from the military draft, daycare facilities, and even paid maternity leave, a perk previously unimagined! To be sure, these were surreal shifts for so many Americans affected by the Great Depression and intimately familiar with scarcity and hopelessness.

Wartime California

Perhaps no region benefited more from government spending during World War II than the West Coast. A strategically vital segment of the continental United States, the California coast became the primary focus of military-industrial production. The federal government virtually poured money into the golden state; new defense manufacturing plants, shipyards, aircraft factories, and military bases were built in cities such as Oakland, Richmond, Sausalito, Vallejo, San Pedro, Alameda, and Treasure Island in the San Francisco Bay. In addition, military industries already established in the San Francisco Presidio, on Mare Island, and in San Diego were greatly expanded. During the war years, the federal government spent a total of $35 billion in California—one-tenth of the total amount spent on all domestic wartime projects. In 1945 alone, the government invested a whopping $8.5 billion in the golden state. (That's quite a staggering figure when one considers that only fifteen years earlier the government spent $3 billion on the entire continental U.S.)

California became a haven for those seeking better, more prosperous lives—just as it had been nearly a century earlier, during the Gold Rush. Millions of Americans traveled West to settle on the California Coast. Migrants, particularly from the South and the Mid-West, were lured by lucrative job opportunities and the promise of sunshine and seascapes. And many found what they hoped to discover.

With such a tremendous influx of migration, some problems arose, particularly in port cities such as Oakland, Richmond, Los Angeles, and Vallejo, in which populations rose sharply from month to month. City governments were largely unprepared for the huge number of new residents seeking housing and schools, requiring medical care and running water, and producing waste. These regions were overwhelmed, to say the least, by the need for new construction and solutions to plumbing and sanitation nightmares.

Often cities produced temporary housing and public services to shoulder the weight of population growth. But just as the poorest of "new immigrants" in cities in the Northeast occupied tenements around the turn of the century, the poorest of wartime migrants—African-Americans and Mexican immigrants—filled the rapidly constructed housing projects. In the years following the war, housing discrimination and loan restrictions would prevent many non-white wartime migrants from moving out of these projects and into postwar, middle-class suburban developments.14

A Penny Saved Is a Penny Earned

Wartime mobilization contributed not merely to a temporary respite from the Great Depression, but planted the seeds for tremendous post-war economic growth. In order to maintain a military large enough and strong enough to fight on two major war fronts, the federal government required most manufacturers to halt production of consumer items. Car manufacturers, for instance, were ordered to cease normal operations and, instead, to assemble armored vehicles to be used on the battlefield.

The federal government also asked Americans to conserve, conserve, conserve! Certain consumer products made scarce by the war, such as gasoline, steel, rubber, coffee, butter, oil, and meat, were rationed in order to prevent shortages and ensure the availability of these items to all citizens, not just to the very rich. Americans, through the use of "ration stamps," were authorized to purchase a limited quantity of each product, and families often gave up many creature comforts altogether.

While Americans had fewer products to buy, they were earning much more than ever before. As a result, families were compelled to save money throughout the war years. Once the war ended and manufacturers discontinued production for war mobilization, consumer products once again filled store shelves. A population buoyed by full employment, rising wages, growing prosperity, and renewed national confidence began to spend—and to spend enthusiastically!

"The war gave a lot of people jobs," Peggy Terry, a riveter during the war, remembers; "It led them to expect more than they had before."15 New expectations, new wages, and new options created by World War II home front mobilization sparked a postwar economic boom and the most prosperous period in the nation's history.

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