Political and Economic Effects (AQA A-Level History): Revision Notes
Political and Economic Effects
The Second World War transformed the political and economic landscape of the USA. Federal authority expanded dramatically as the government assumed unprecedented control over production, labour, prices, and daily life. At the same time, war production ended the Great Depression, created full employment, and established the USA as an economic powerhouse.
Political effects
Expansion of federal government control
The federal government extended its reach into areas previously beyond its authority. This expansion reflected the demands of total war mobilization and represented a substantial shift in the relationship between the state and citizens.
This wartime expansion of federal authority marked a turning point in American governance, with the government assuming control over aspects of daily life that would have been unthinkable during peacetime. Many of these powers remained influential in shaping post-war federal policy.
The Smith Act (1940) criminalized attempts to threaten or overthrow the government. Originally aimed at supporters of fascism, the legislation later became associated with action against Communists, demonstrating how wartime measures could be repurposed for broader political ends.
The Selective Service Act (1940) introduced conscription, compelling military service and marking a departure from the traditional reliance on volunteer forces. This represented direct government control over individual lives.
Government agencies and economic management
The war necessitated the creation of numerous federal agencies to coordinate production, manage labour, and control the economy.
The Office of War Mobilization controlled the supply of goods and prices across the economy. This agency exercised sweeping powers to direct resources towards war production.
The National War Labor Board set wages throughout industry. By determining pay rates centrally, the government prevented labor disputes that might disrupt war production and controlled inflation.
The War Management Commission, established in 1942, recruited workers where they were needed most. This body directed labour allocation, moving workers into essential industries and military production facilities.
The coordination of these various government agencies represented an unprecedented level of federal planning and economic management. Each agency held specific powers that, when combined, gave the government near-total control over the wartime economy.
The Office of Scientific Research and Development mobilized thousands of scientists to develop new weapons, from bazookas to the atomic bomb, as well as medical advances to save wounded soldiers. This represented government coordination of research on an unprecedented scale.
Price controls and rationing
The Office of Price Administration and Civilian Supply, established in August 1941, controlled inflation through direct intervention in the economy. In April 1942, it issued the General Maximum Price regulation, which froze prices at March 1942 levels to prevent inflation from spiraling.
The agency held power to control all prices except agricultural commodities and to ration scarce items. Eventually petrol, tyres, coffee, sugar, and other foodstuffs were rationed. Almost 90% of food items came under price controls, fundamentally altering how Americans purchased goods.
Economic effects
War production and the end of the Depression
The Second World War achieved what the New Deal could not: complete economic recovery. Nearly 9 million Americans remained unemployed as late as 1941. War production made the New Deal measures irrelevant.
The war economy succeeded where New Deal programs had fallen short. While Roosevelt's reforms had provided relief and created jobs, they had not eliminated unemployment. The massive industrial mobilization for war finally absorbed all available workers and ended the Depression completely.
Between 1941 and 1945, American industry produced 86,000 tanks, 296,000 aircraft, and 15 million rifles. Farm income grew by 250%. This massive output required full employment.
Transformation of employment
Unemployment effectively ceased by 1942. In 1944 it stood at 1.2%, having fallen from 14.6% in 1940. The war economy absorbed all available workers.
Women entered the labour force in unprecedented numbers. By 1944, 6.5 million women had joined the workforce. By the end of the war, almost 60% of women were employed, transforming gender patterns in employment.
Employment Transformation: African Americans
The wartime labor shortage created unprecedented opportunities for African Americans:
Federal Employment: Rose from 50,000 (1939) to 200,000 (1944)
Urban Migration: 5 million African Americans moved to cities between 1940 and 1944
Defence Industry Jobs: 1 million found employment in defence plants
This migration represented not just economic opportunity but substantial demographic and social change that would influence the post-war civil rights movement.
African Americans also benefited from wartime labor demand. The number working for the federal government rose from 50,000 in 1939 to 200,000 by 1944. Between 1940 and 1944, 5 million African Americans moved to cities, where a million found jobs in defence plants. This migration represented substantial demographic and economic change.
Economic growth
Gross National Product (GNP) rose from $91.3 billion in 1939 to $166.6 billion by 1945, demonstrating the scale of economic expansion.
| Year | Spending ($ billions) | Percentage of gross domestic product (GDP) |
|---|---|---|
| 1941 | 6.1 | 5.1% |
| 1942 | 22.1 | 15.9% |
| 1943 | 46.6 | 32.2% |
| 1944 | 62.9 | 36.0% |
| 1945 | 64.5 | 37.2% |
This table shows American defence spending from 1941 to 1945, illustrating how military expenditure came to dominate the economy. By 1944-1945, defence spending reached over one-third of GDP, demonstrating the complete transformation of the American economy into a war machine.
The consumer experience
Under the Office of War Mobilization, food prices and rents were strictly controlled. Items such as meat, sugar, and petrol were rationed. Production of cars for ordinary motorists stopped entirely.
Many consumer items such as clothes were made from less material and became simpler in style. Others disappeared from shops entirely. However, most Americans were comparatively well-paid during the war and did not suffer the deprivations experienced in belligerent countries.
Although prices rose by 28% during the war years, average wages increased by 40%. This meant that despite rationing and limited consumer goods, Americans actually had more purchasing power. People may not have had much to spend these wages on, but they could and did save. The spending power of these consumers helped fuel the post-war economic boom.
National debt and taxation
The costs of war created enormous financial burdens. The National Debt, which stood at $41 billion in 1941, had risen to $260 billion by 1945. The federal government spent twice as much between 1941 and 1945 as it had in the previous 150 years.
Roosevelt hoped to pay for much of the war production through increased taxes. The highest earners paid 94% tax. This gave a sense of greater equality during the war. The poor grew wealthier during the war years and the rich received a smaller proportion of national income, representing substantial redistribution.
Overall economic transformation
The Second World War brought enormous economic changes to the USA. Unemployment collapsed and the country became an economic powerhouse. The government exercised direct control over the economy in ways unthinkable in previous periods, setting wages, freezing prices, rationing goods, and directing labour allocation. This wartime mobilization demonstrated the capacity of federal authority to manage the economy and established patterns that would influence post-war economic policy.
Key Points to Remember:
-
The federal government expanded its authority dramatically during the war, creating agencies to control wages, prices, production, and labour allocation while introducing conscription and legislation against government threats.
-
War production ended the Depression completely, reducing unemployment from 14.6% in 1940 to just 1.2% by 1944 through massive output including 86,000 tanks, 296,000 aircraft, and 15 million rifles.
-
The workforce was transformed as 6.5 million women entered employment and 5 million African Americans migrated to cities for defence jobs, while GNP nearly doubled from $91.3 billion to $166.6 billion.
-
Strict economic controls included price freezing, comprehensive rationing of food and fuel, and the halting of consumer car production, though rising wages (40% increase) allowed Americans to save for post-war spending.
-
The National Debt surged from $41 billion to $260 billion as the federal government spent twice as much in four years as in the previous 150 years, funded partly through progressive taxation reaching 94% for highest earners.