- Carmakers were starting to produce tanks.
- Producers of stoves and refrigerators were now manufacturing munitions.
- Airforces needed more aircraft’s, so they were built.
- Coal, iron, oil and steel all expanded vastly to deal with the extra $175 billion of government war contracts.
Because these businesses were expanding so greatly, they obviously needed more employees to work for them. So this therefore gave people much more jobs. People with much more jobs, means people with much more money. This money would be spent, which would make the economy grow because businesses could expand and employ more people. This was a huge economic boom that has never been equalled. It enabled new businesses to be established and for the older ones to employ new workers. The production did not stop after World War II. The Cold War was an imperative reason for US economic strength in the 1950s. Like World War II, the government needed to spend money on war related products. So this once again meant another economic boom. Wages leapt up while America was preoccupied by making armaments. American workers now had big spending powers for the post war years. For countries in the West such as Italy and France, it took several decades for them to match America’s living standards.
People now had jobs, for example working in a factory, or as a mechanic, a toolmaker, or a stevedore. This therefore gave people more money to spend on consumer.
So American producers had to meet the demands for cars, cookers and fridge’s, housing and holidays, telephones and travel, and nursery furnishing. People were encouraged to spend through many different factors, one of them being advertising. Advertising on T.V was very popular because by 1956 over 81% of Americans owned a T.V. Almost all television stations were commercial and 20% of broadcasting time was taken up by commercials. So therefore the company’s message could reach people, more effectively. Hire purchase was another big factor, which encouraged people to spend their money. Instead of paying the full amount for an item, you could pay it off in monthly instalments. This obviously helped America’s businesses because more people were buying their products, which in turn means that the business is going to expand, which means they will need to employ more people. This idea certainly appealed to many Americans, who thought it was a more efficient way of purchasing goods.
President Eisenhower perhaps played the biggest part of encouraging people to spend. He did this by first of all cutting taxes on businesses and rich people and ended controls on wages and prices. This had a huge impact because there was now more profit. This meant that people could invest in businesses, which lead to more jobs, more products and more economic prosperity generated. Social Security benefits had now become larger and extended to include another 10 million people. The minimum wage had now been increased by 25% from 75 cents an hour to $1.00 an hour. He encouraged his fellow Americans to spend and shopping became a recreational activity. He once recommended people during a slight sale drop in sales to, “buy anything.” He gave out loans and mortgages to people in an attempt to help them buy their own homes. People now had much more money to spend and so therefore the economy just grew and grew. The term ‘consumerism’ somewhat relates to this because it describes the theory that this steadily increasing purchase of goods, not only pleases people and makes them happy, but ensures expansion in the economy.
Between 1945 and 1960, the population was increased by about 40 million, (30%) to a total of 179,323,175 because of a post war ‘baby boom’. People were becoming more and more prosperous, so as a result of this they moved to homes in well-planned and well-contained suburban communities, complete with new shopping centres called malls. This helped boost the building trade and meant that there was a growing need for more cars to be built. This of course led to a number of new jobs because for the cars to be built there had to be a road. So companies were employing more and more people, and the money was just there for the taking.
The war also lead to some social change, for example groups such as such as black people changed greatly. The war provided black Americans an excellent opportunity to press their case for civil rights. Women were also affected by the war. By 1960, 32% of women had jobs outside the home. This was a 15% raise from 1940. Obviously women now had the confidence to apply for jobs because of the skilled work they achieved during the war. These two factors, without doubt, made a positive contribution to the economy.
Therefore I conclude that there were many different reasons for why the USA was extremely prosperous in the years 1945 – 1963. The key factor for this was World War II. This generated more money for the USA than they thought was conceivable. Because so many businesses were expanding greatly to provide for the war, they obviously needed more employees to work for them. So this therefore gave people much more jobs, which in turn gave people much more money. This money would be spent on consumer goods, which would make the economy grow. President Eisenhower played a big part in encouraging people to spend. He managed to somehow cut taxes on businesses and rich people and end controls on wages and prices. This had a huge impact because there was now much more profit. This meant that people could invest in businesses, which lead to more jobs, more products and more economic prosperity generated.
This was the biggest economic boom in the history of the world. The war economy also boosted agriculture as farmers had an assured market in feeding the armed forces.
Americans at home relished a speedy increase in their income and their way of life. The simplest but the most influential aspect for their wealth and success was World War II. It had ironically brought a permanent end to the Depression, and replaced it with prosperity that would last for a very long time to come.