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The war revitalized American industry due to high military demands for food, clothing, weaponry and other necessities that spurred factory production throughout the nation. The unemployment rate dropped to 1.2% as Americans took up newly available jobs from the flourishing wartime economy. Workers joined the organized labor movement that became a major counterbalance to both the government and private industry. The federal government during this time also emerged as an influential figure in economic activity in order to maintain an economy capable of supporting both the war and homefront. [32]
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"I need not repeat the figures. The facts speak for themselves.... These men could not have been armed and equipped as they are had it not been for the miracle of production here at home. The production which has flowed from the country to all the battlefronts of the world has been due to the efforts of American business, American labor, and American farmers, working together as a patriotic team."
-President Franklin D. Roosevelt, Navy Day speech, October 27, 1944
War AdministrationFactories shifted from producing consumer goods to military necessities. [36]
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Ever since the US entered World War II, the nation faced the issue of regulating the economy. American leaders during the war realized that they could not simply allow industries and businesses to grow in a laissez-faire manner. Without regulations, there was the possibility that American manufacturers would stubbornly continue to produce consumer goods instead of shifting to produce military necessities for the war effort. To organize the growing economy, the federal government spawned a variety of mobilization agencies which not only purchased goods, but also directed the manufacturing process of private companies and industries. [32,33,34] |
War Production Board
In January 1942, President Roosevelt's Executive Order established a new mobilization agency, the War Production Board (WPB). The purpose of the WPB was to regulate war time production, One of the primary problems of a war economy involved balancing the needs of civilians, whose efforts fueled the economy, against the needs of the military, whose primary objective was to get through the war swiftly and efficiently.
Donald Nelson, whom Roosevelt assigned to be chairman of the WPB, had a three step plan for war production: first, the military had to figure out how much equipment and ammunition was needed by both U.S. and allied troops combined; second, the board had to decide the amount of production the economy was capable of supporting; third, resources had to have a balance against demand. The WPB created the Controlled Materials Plan specifically for the third step. The CMP allocated steel, aluminum, copper and other resources to industrial users and factories.
In 1942, Nelson also resolved the "feasibility dispute," a conflict between civilian administrators and their military counterparts over the extent to which the American economy should be devoted to military needs during 1943. Nelson argued that "all-out" production for war would dangerously limit America's adaptability to post-war production. After convincing the military to decrease its demands, Nelson successfully established a precedent for balancing war production-- production would meet most military and some civilian needs. [35]
Donald Nelson, whom Roosevelt assigned to be chairman of the WPB, had a three step plan for war production: first, the military had to figure out how much equipment and ammunition was needed by both U.S. and allied troops combined; second, the board had to decide the amount of production the economy was capable of supporting; third, resources had to have a balance against demand. The WPB created the Controlled Materials Plan specifically for the third step. The CMP allocated steel, aluminum, copper and other resources to industrial users and factories.
In 1942, Nelson also resolved the "feasibility dispute," a conflict between civilian administrators and their military counterparts over the extent to which the American economy should be devoted to military needs during 1943. Nelson argued that "all-out" production for war would dangerously limit America's adaptability to post-war production. After convincing the military to decrease its demands, Nelson successfully established a precedent for balancing war production-- production would meet most military and some civilian needs. [35]
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Change from Domestic to Military Production:
General Motors
General Motors (GM) is an example of an industry that experienced an extreme shift from manufacturing consumer goods, automobiles, to producing military goods to support the war effort: GM churned out $12.3 billion worth of military equipment. GM was well suited for war production because the company's machinery, structure, and divisions bore a great similarity to those in factories that were dedicated to manufacturing war time goods. GM became one of the top military manufacturers during World War II, producing a wide range of goods like ammunition, cylinder heads, tanks, and aircraft parts. 113,000 employees from GM also left the company to join the army. [37]
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