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The U.S. Economy in World War II (Columbia Studies in Business, Government, and Society)

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This book is a straightforward and concise survey of the United States economy during the World War II era (1939-1945). At times it is too superficial, but overall it is an excellent introduction to the topic. The primary theme is that the war accelerated and definitively established the mixed economy seen in the U.S. today. (A mixed economy is one where some goods and services are provided by private enterprise and others, usually basic infrastructure goods and services, are supplied by the government.)

Particularly good is Vatter's description of the transition from a civilian to a military economy. This began in March 1941 with the passage of the Lend-Lease Act. Military expenditures in the United States went from $1.8 billion in 1940 to $6.3 billion in 1941. One year later they were a whopping $22.9 billion. During this same period, military personnel on active duty increased from half a million people in 1940 to four million in 1942.

The immediate result of this war economy, and the concomitant explosion in total federal expenditures, was the end of the Great Depression. Expenditures increased so rapidly that the federal deficit more than doubled as a percentage of GNP from 1939 to 1941. This Keynesian "anti-depression medicine" finally ended twelve years of mass unemployment. Only the onset of war was sufficient to bring into operation Keynesian deficit spending of sufficient magnitude to accomplish this.

The war years saw a boom in the United States economy of remarkable proportions. From 1940 to 1942 industrial production increased by 58 percent. Total productivity increased by 16.5 percent from 1941-1945. The number of unemployed, which stood at over eight million in 1940, dropped to only one million in 1943. The number of women employed increased by a third (5.2 million individuals), to the point where they comprised approximately one third of the civilian labor force and enjoyed a 36.3 percent participation rate, at the time a historic high.

This huge upturn in the economy was accompanied by (some would argue, caused by) the creation of a huge, bureaucratic administration designed to oversee various sectors of the economy. The focus of the new bureaucracy was on production, distribution, pricing, and labor. Towards that end, an alphabet soup of 165 new agencies was created, among them the WPB (War Production Board), OPA (Office of Price Administration), OPM (Office of Production Management), and WMC (War Manpower Commission). Many of these agencies had overlapping and even competing functions, and their record was certainly mixed, but Vatter believes that their performance was crucial to the functioning of the economy. Somewhat amazingly, after the war ended virtually all of these bureaucracies were dissolved. However-and this is the most important part-the success of the wartime economic planning provided the justification for a new, ongoing role for Big Government in the economic affairs of the nation. The United States was never to return to the laissez-faire policies of the pre-depression era. From this point on, the federal government was to assume a crucial role in the supply and distribution of goods and services, hence the creation of the mixed economy.

Along with this crucial change, the war had several other consequences as well: full employment; technological innovation (e.g., radar, nuclear power, new pharmaceuticals); population growth (the "Baby Boom"); and the increased labor force participation of women. None of these, however, were nearly so important as the result mentioned above.

I needed this book for a class in college. It was informative, loaded with information, and mind-numbingly boring. I got a good grade and I posted the final paper on hubpages, where it continues to get way too many hits. So, if you need the information in this book it is definitely worth it. Just make sure you have lots of coffee on hand.