Due to the physical devastation of France, Germany, Japan, and The Soviet Union, American manufacturers enjoyed a virtual monopoly over international trade. In addition to this the development of new and more efficient machinery and computers lead to a 35 percent jump in the productivity of American workers between 1945 and 1955.
The GI Bill of Rights; some people feared that a sharp drop in military spending and a sudden pour of veterans back in to the American civil workforce would send the economy back down to the previous levels of depression, causing widespread unemployment. Such concern forced congress to pass a unanimous vote for the Servicemen’s Readjustment Act of 1944. This was popularly known as the GI Bill of Rights. It led to the creation of a new government agency, the Veteran’s Administration. The GI Bill was set up to provide veterans especially young veterans with money to help them gain civil service jobs, loans for home construction, access to government hospitals and also providing them with generous subsidies for college or other training. The GI Bill was funded by the Federal Government, who’s spending had also increased between1950 and 1960 from $70,334 million to $151,288 million. Almost 8 million veterans took advantage of the $14.5 billion in GI Bill subsides to attend college or to enrol in job training programs. 5 million veterans also used additional GI Bill money to buy new homes. These two programmes combine to produce a social revolution. The benefits of the GI Bill encouraged hundreds of veterans to pursue higher education. Before World War two approximately 160,000 Americans graduated from college each year, but by 1950 the figure had more than tripled. In 1949 veterans accounted for 40 percent of all college enrolments and the USA had the worlds best-educated force.
During the war, the Americans had postponed purchases of major items such as cars and houses, and in the process had saved over $150 billion. Now they were eager to buy. The USA after World War two thus experienced a purchasing frenzy, the ‘Baby Boom’ generation of the 1940’s helped contribute to this as a new larger demand for nappies, baby food, toys, medicines, schools, books, teachers, furniture, and housing boosted the economy. The ‘Baby Boom’ peaked in 1957 with the return of some 12 million veterans’, and during the period between 1946 and 1964, America’s total population grew by almost 40 million, a huge 30 percent increase. The massive population increase spurred the growth of new suburban communities as the population started to move from cities in to the countryside.
Post-war America soon turned in to a construction site as the industry started to produce the tools and materials to build and furnish the new homes. As new and better homes became available to supply the ever-growing population, between 1945 and 1963 the proportion of homeowners increased by 50 percent.
Helping the suburban effort was William Levitt. He produced houses, which arrived on lorry and were bolted together on site; he called his towns ‘Levittown’s’ (suburbia towns). His first had 17,000 homes for 82,000 people, the towns looked awful from the air but apparently they were not so bad from the ground. A move to suburbia was encouraged by several factors, firstly the Federal Government insurance of long-term low interest mortgages which meant that more people could afford to move. The second factor was that there were more car ownerships to go with the suburban roads and newly developed interstate highways. The demand for cars came in 1945; the car industry of Detroit was under huge pressure from foreign and local imports, even more so than today. It supplied nearly all the cars for American roads; the extravagantly styled cars were modelled around the countries national boastful mood. Every year the style would change, and in an attempt to ‘keep up with the Joneses’ each family would buy the new model. Everyone’s prize possession was a car and it was very important to keep in style, when a farmers wife asked why she preferred a car to indoor plumbing she replied, ‘you can’t ride to town in a bath tub’. As a result of a population who thought like this the car economy overflowed.
The Cold War was an important reason for US economic strength. People got higher wages for their jobs, which left them with more spending money, and to go with this the threat of a nuclear holocaust put a ‘live now pay later/no tomorrow’ attitude encouraging people to spend money on pleasure items like flash cars and women. In September 1949 the Russians exploded their first atomic bomb, this contributed to the arms race with the USA this meant that the US defence industries had an enormous boost. As paranoia about Communist world domination spread in the USA the Government boosted a large percent of the GNP to the aerospace development in Florida and California, who alone had the sixth largest economy in the world during the Cold War, this meant that companies like Convair (a missile building company), Higley Corporation (an aironautics company), and Lockheed Aerospace flourished during the Cold War. American involvement in the Korean War in 1950 meant that even more had to be spent on defence in the form of more conventional weapons.
As a result of all this the US economy became so prosperous during the period of 1945-1963.
