05/29/2015
The U.S. Economy During World War II
Following a visit to the National World War II Museum in New Orleans, La., five years ago, I ran the following piece on the economy and production during the war years as examples of how when we needed to, we could ramp up to incredible levels.
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[Dates can vary due to availability of data.]
U.S. GDP rose from $99.7 billion in 1940 to $212 billion in 1945.
[National debt rose from $48.9 billion in ’41 to $258 billion by ’45.]
The unemployment rate was 14.6% in 1940 and just 1.2% in 1944.
Defense spending jumped from $1.5 billion in 1940 to $81.5 billion in 1945.
Ford’s Willow Run bomber factory produced nearly one plane an hour by March 1944. 96,000 total military aircraft for that year.
There were 33 warships in 1941…568 in 1943.
[Number of vessels of all types: 1940…1,099; 1945…67,952]
1,461 tanks in 1941…21,250 in 1943.
357,000 rifles/carbines in 1941…3,489,000 in 1944.
77,000 machine guns in 1941…829,000 in 1943 [made at a GM plant in Flint, Michigan]
1.2 million grenades in 1941…40.6 million in 1944.
Andrew Jackson Higgins, of Higgins landing craft fame, had 50 employees in 1937 and 25,000+ during the war. His LCVP (landing craft, vehicle, personnel) won the war in the estimation of none other than Gen. Dwight D. Eisenhower.
During the war years, among many of the conservation measures we were asked to take was:
“Save your cans…Help pass the ammunition”
“Save waste fats for explosives. Take them to your meat dealer.”
[One pound of fat could be turned into 1/3 pound of gunpowder. 30,000 razor blades could be used to make 50, .30-caliber machine guns.]
And the following is a little economic history from “The Oxford Companion to World War II”… General Editor I.C.B. Dear, Consultant Editor M.R.D. Foot. [First published in 1995, it is a must reference book for any history buff.]
“Since nearly half the GNP had to be devoted to the war, the workers could not be allowed to spend more than half their wages. Price controls and rationing were imposed so that essential items would remain cheap. Consumer durables like automobiles, domestic appliances, and houses were no longer produced. The government spent $350 billion ($318 billion for direct war purposes), but only took in $147 billion in taxes. The deficit had to be borrowed. Six million volunteers whipped up patriotism and drained surplus money by selling $157 billion worth of war bonds. (Those assets would play a decisive role in maintaining prosperity after 1945.) The consequence was that the national debt of $259 billion in 1945 exceeded the GNP of $212 billion; since interest rates were kept artificially low, at about 1%, the burden was bearable. Taxes soared during the war. Previously only the wealthiest tenth paid income taxes; now 90% of all families paid, and at stiff rates. A typical worker with a wife and child earned $2,600 in 1944. Of that $253 went to federal income tax (23% after exemptions of 3 X $500), and $26 went to Social Security. Of the $2,600, 11% went to taxes, 33% to food, 33% to clothing and housing, 5% to transportation, 10% to medical costs (private medical insurance was just becoming popular), and 8% was saved or used to pay off old depression debts. Corporate taxes were raised to guarantee that profits would remain at about 1936-7 depression levels of 10% of net worth.”
Wall Street History returns in two weeks.
Brian Trumbore
