Major Problems and Policies at the End of World War II
JUST AS was the case at the end of World War I, America emerged from World War II as a tower of economic strength and abundance in a world of economic disorganization and want. There were, however, important differences between the two periods. The first was a matter of degree, since the relative importance of the American economy to that of the rest of the world and the disruption of economic life abroad were far greater after World War II. The second difference lies in the larger realization of the American people and their government as to both their position and their responsibilities to the rest of the world in the postwar period. Elaborate plans had been drawn up and organizations created before V-J Day to deal with the problems of the postwar. A third difference lies in the domestic: stabilization policies of the government and the determination to avoid the extremes of inflation and deflation which characterized post-World War I. While moderate price inflation continued in the United States until the middle of 1948, the transition to peacetime production at high levels of employment was accomplished in a remarkably short period of time, and the American economy has been able to provide a vast amount of economic assistance to the rest of the world while enjoying a rising standard of living for her own people.
The magnitude of America's economic demobilization is indicated by the fact that, while in 1944 Federal government purchases of goods and services for war purposes amounted to $89 billion out of a gross national product (GNP) of $211 billion (or about 44 per cent), by 1946 government purchases totaled $21 billion out of a GNP of $204 billion (or about 10 per cent).1 Many millions of men and vast quantities of resources had to be shifted to peacetime production, including the production of new facilities. This shift was accomplished with only a little over 2 million persons unemployed in 1946 and 1947 and only a moderate drop in real GNP, which could be accounted for partly by the reduction of overtime____________________