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<text> <title> (1940s) The Postwar Economy </title> <history> TIME--The Weekly Newsmagazine--1940s Highlights </history> <link 11823> <article> <source>Time Magazine</source> <hdr> The Postwar Economy </hdr> <body> [At the war's end, the U.S. stood preeminent in the world. It had performed a miracle of production as the "arsenal of democracy"--and of financing, in turning out so much war materiel while diverting only 40% of its gross national product to defense--and of transport, in getting these armaments to the U.S. fighting man half a world away and to the other far flung places where they would do the most good.] (August 20, 1945) Marshal Stalin's famed Teheran toast to U.S. industry--"Without American production the United Nations could never have won the war"--was never more appropriate. The war was ending, and the record was in. In the five years since the fall of France, U.S. industry and labor had turned out: <qt> <l>299,000 combat planes (96,000 last year);</l> <l>3,600,000 trucks;</l> <l>100,000 tanks;</l> <l>87,620 warships (including landing craft),</l> <l>5,200 merchant vessels;</l> <l>44 billion rounds of ammunition;</l> <l>434 million tons of steel;</l> <l>36 billion yards of cotton textiles for war.</l> </qt> Despite this, U.S. home-fronters had remained the best housed, best clothed and best fed people in the world. But U.S. basic resources had suffered what might be an irreparable drain. Said an anxious Mead Committee report fortnight ago: war has left the U.S. with only enough oil for twelve years (at present production rates), enough iron ore for eight years, a seriously depleted timber supply. [The U.S. had also accomplished other deeds that would have a profound effect on post-war life. To the wonder drug penicillin, which had been discovered in the 1930s and perfected in wartime so that it played a large role in keeping fighting men alive, U.S. laboratories added other antibiotic drugs such as streptomycin. By the war's end nylon, which had gone into parachutes and other war materiel, was available for men's shirts and women's stockings. The U.S. spent half again as much on perfecting radar (nearly $3 billion) as on the atomic bomb program; radar was now set to myriad new peace-time uses. One of the most profound pieces of "social" legislation passed, in terms of the numbers of people in directly and indirectly affected, then and later, was the "G.I. Bill of Rights," which pushed millions of ex-servicemen and their families into the middle class by making university education and housing affordable.] (April 3, 1944) To the time-honored list of things which U.S. politicians may be counted upon to denounce relentlessly--the housefly, the common cold, the man-eating shark--Washington's Senator Homer Bone in 1937 added cancer. When he introduced a bill for a national Cancer Institute, it bore the sponsoring signatures of 94 Senators. (The other two hastened to add theirs before the bill came to a vote.) Last fortnight Missouri's Bennett Champ Clark hit on something which politicians almost as unanimously favor. He introduced a veterans' benefits bill, jointly sponsored by 80 other Senators. Last week, amid plaints by the remaining 15 Senators that they had not had a chance to sign it in advance, the Senate passed the bill unanimously. The House is expected to follow suit this week. The bill came from American Legion. It was nicknamed the "G.I. Bill of Rights," as it combined in a single measure most of the proposals for helping veterans that have been made in Congress, except mustering-out pay (already voted) and the inevitable bonus: Schooling for at least one year, and up to four; in elementary, business, high or higher schools; with allowances of $500 a year for tuition, plus $50 a month for subsistence and an extra $25 for one or more dependents. Loans up to $1,000 for buying homes, farms, farm equipment or business properties, with no interest the first year, and only 3% thereafter. Special job-finding services. Unemployment benefits up to 52 weeks at $15 a week, plus an extra $5 for one dependent, $8 for two, $10 for three. [While the American home front had had it awfully easy compared to civilians in other countries, it had suffered its share of hardships--shortages, rationing, the corruption of black markets. Now with the coming of peace, Americans wanted an end to controls that had seemed warranted in wartime and a return to a more unfettered economic life. This was a lot easier said than done.] (March 4, 1946) During the war, the U.S. had seemed to do a pretty fair job of avoiding the symptoms of inflation. But actually the Government had failed to combat the real causes of inflation. Only 41% of the cost of war was paid for by taxation; the rest was financed by selling Government bonds, almost onehalf to banks. This created what Federal Reserve Board Chairman Marriner Eccles calls "monetization of the public debt": by the complex workings of modern finance, sale of a million dollars in Government bonds to a bank produces the same end result as printing a million $1 bills. Rough Money. In the wartime economy, everything was scarce but this artificially created money. The money was poured out in high profits (before taxes) to encourage industry, high wages to encourage labor, reasonably high prices to encourage farmers. It had--and still has--no place to go. From Pearl Harbor Sunday to V-J day, savings of individuals had risen $145.5 billion. Money in circulation had quadrupled over the prewar period. The process was still continuing. Individual incomes in the twelve months ending next August are estimated at $123 billion. Along with past savings, this will give the public around $300 billion of spendable money--and the last estimates of the year's production foresee only $101 billion of goods and services to spend it on. By the inexorable workings of the law of supply & demand, Economic Adviser Chester Bowles was in for a rough year. Clogged Channels. There was only one real cure--production. During the war, U.S. manufacturing capacity grew so fast that nobody really knows how big it is today. Steel capacity, 81,619,000 annual tons before the war, is now 95,000,000 tons. The auto industry, which never made more than 4,500,000 passenger cars a year, can turn out more than 7,000,000 in the next twelve months. But these statistics in the big industries tell only part of the story. The channels from factory to consumer are clogged now by postwar readjustments, by continuing shortages of parts and thread and the little businessman's zippers, by strikes, shifts in the working population, hoarding by speculator's who are betting on higher prices. Once the channels are clear, they will start spouting a flood of automobiles, electric fans, chromium bathrooms, aluminum dishwashers, movie cameras and nylon such as the world as never seen before. [Price controls were abruptly dropped in mid-1946, after Congress failed to reach agreement on how to moderate them.] (July 15, 1946) On the surface, the U.S. people's first reaction to the sudden end of price controls was violent. Headlines told of prices for meat, milk, butter and bread shooting up like fat in a fire, accounts of sky-high price boosts sputtered noisily in the news. The first day or two it seemed to many that the nation had caught panic at the notion of being on its economic own, and free of Government price controls. As the week of uncertainties wore on, many a citizen got over his first fright of rocketing prices. By the end of the long Independence Day holiday most people felt somewhat better. The big blow they had expected had not hit. The nation's economy had not been shaken to its roots; it had hardly been shaken at all. The dollar had not gone to pot. No panicky buying had developed at any market level. (October 21, 1946) Life among the shortages, like life among the Ubangis, was quite comfortable if you only knew the rules. You had to be sharp, keep an open mind, and remember that the whole thing as a matter of percentages. You had to get up early and work both sides of the street. You had to keep your hand on the throttle and your eye on the rail. You had to make friends and influence people. You had to know Joe and make with the dough with a hey-nonny-nonny and a vo-de-o-do. But in Manhattan a thousand sharpies got the word "beef" on the grapevine from the 14th Street Market, were thus able to stand in the rain all night, get into the scrimmage and out again with the bacon by noon the next day. You could get a bear roast in Denver if you knew the right party. And all over the U.S. people were eating venison. Meat was just one of a hundred fields of endeavor. Baked beans were scarce in New England. Fatback was scarce in the South and thousands of cooks were grumpily boiling vegetables without it--just like the dam-yankees. But you could get things, Mac. If you wanted to load up on wine, gin, rum or all three you could get a new automobile by trading in your used car for a reasonable price--say about nine dollars. Housewives in New York's suburban Westchester County maintained espionage networks reporting to each other the arrival of chain-store trucks, and got first grab. Then there was barter. A car would get you an apartment and an apartment would get you a car. A butcher in Atlanta was doing well in the house construction game--meat got him nails, flooring, plumbing fixtures when other builders were shut down tight. World Series or college football tickets, good liquor, and even soap, automobile batteries, and sugar had become the wise guy's wampum. Millions of U.S. citizens seemed to find the whole business highly satisfying. Housewives complained vociferously, but brought home overpriced hamburger as proudly as if they had the Hope Diamond tied up in a pickle carton. There were other millions who got mad, concluded 1) that they were living in an immoral age; 2) that somebody was to blame; and 3) that they were rapidly going broke. But if they got ugly with the butcher, the baker and the candlestick maker they ended up eating eggplant. To get the goods you had to smile, smile, smile. (January 13, 1947) The U.S. in 1946 rid itself of wartime controls as a giant might escape from a straitjacket--roaring, ripping and kicking, with little regard for himself or the bystanders. Nevertheless, Gulliver, freed, defeated most of the Blefuscudians--the shortages of foods & goods. And the great drop in Government spending ($45 billion less than in 1945) was made up by private spending. U.S. retail sales reached a record or $96 billion; $105 billion was poured out in wages & salaries, and net corporate profits totaled an estimated $12 billion, some 20% more than 1944's record high. Farmers raised the most profitable crop in history. And the nation's gross national product (goods, services, construction, etc.) soared up into the ionosphere. The total product--an estimated $195 billion--was some 61% more than in any other peacetime year. Most of the worst shortages had ended by year's end. Once-bare shelves were heaped with white shirts; nylon and meat lines melted away; "sale" was reintroduced into the language. There was more than there had ever been--at a price. In turning it out, the U.S., by any temperate standard, had done a giant's job. Yet no one seemed satisfied. (Americans never are.) For the great expectations had been greater than ever Gulliver unbound could fulfill. [The biggest, or at least the most visible, problem plaguing the U.S. economy was labor. During the war, U.S. labor, with the notable exception of John L. Lewis' coal miners, adhered to a no-strike pledge. With the war's end, labor felt freed to push for higher wages, even though price controls were still in effect.] (October 1, 1945) Peace was busting out all over. The sights and signs were everywhere. The sign of the times was "52 for 40 or Fight." The sight of the times was bluecoated cops standing by at picket lines. (October 15, 1945) Workers had demanded 52 hours' pay for 40 hours work--the national labor formula for making as much in peacetime as in war. The unions, now grown to a total membership of 14,500,000, were in no mood to slide back from the earning levels of the war years. Their methods of dealing with management had been developed to a science. Many of them had to demand wage increases and better working conditions to keep from losing their newly acquired membership; many of them, despite the efforts of top-level bosses, were unable to control rebellious and irresponsible locals. [Telephone strikes, bus strikes, steel strikes, meat-packing strikes, electrical strikes; by February 1946, more Americans were out on strike than ever before. The government finally allowed some prices to rise to accommodate wage raises, but it was only a respite. Then Lewis' coal miners went out again, for what seemed like the most trivial of reasons. The strike lasted six weeks. Coming at the end of winter, the strike had crippling effects: hundreds of factories shut down and laid off workers; rail lines slowed. There were widespread electric power shortages, especially in Chicago. European countries dependent on U.S. coal shipments were also affected. Nobody could really understand the reasons for the strike.] (May 20, 1946) Did the great man himself know what he had on his mind? What does John Lewis want? He has no real desire to reform the economy. He is actually an economic classicist. Is he obsessed with a desire for power? Time & again he has deliberately thrown away chances to increase his power, as when he broke with Roosevelt. Time & again he has recklessly doublecrossed with reviled the very men who could help him to power. Is his objective a strong, unified labor movement? No labor leader in U.S. history has split labor into so many parts and hacked off so many splinters. does he really give a damn for labor? Obviously he wants a bigger and stronger miners' union, because that is the platform on which he parades. but he has very little association with mining these days. The country's welfare is the miner's, and for the country's welfare he has shown a little regard. John Lewis' one objective may be a very simple one: just to be in the limelight. Throughout the years, like a potbellied moth, he has courted the flame of publicity. History, while recording his contributions--his gains for his miners, his great exposition of the idea of industrial unionization, his usually peerless strategy--may also record that he was one of U.S. labor's greatest charlatans. His strike had approached the proportions of the British general strike of 1926, which had boomeranged on labor. He would not want that. There was a point beyond which he did not care--or dare--to go, which he had carefully calculated. He fed on discontent but he had no stomach for disruption. He waited. He thought he had stirred up just the right amount of public indignation to force the President to intercede. He liked dealing on the top level. Then the message came; Harry Truman summoned him--but not a moment too soon. Triumphantly, Lewis acted. Three hours before he was due at the White House, he ordered his miners back to work--not permanently, but for a truce of twelve days. There might be a truce, but with John Lewis around there could never be much peace. [Railway strikes, dock strikes, maritime strikes, sugar strikes--the U.S. economy limped into 1947. Yet another coal strike was finally met by government injunctions and fines as well as outraged public opinion. This time, Lewis backed down. In the meantime, partly in backlash, the 1946 midterm elections had produced a Republican majority in both houses of Congress. The Republicans quickly set about writing a labor bill that would repeal some of the liberalizing provisions of the Wagner Act of 1935 and other 1930s New Deal legislation and curb some of the excesses they deplored. They came up with the Taft-Hartley Act.] (April 28, 1947) The American people had had enough, and the House knew it. Labor's spring strike fever had given the nation a new fit of chills. The House, even more constituent-conscious than labor-shy, reacted with a stunning strike-curb bill, then clinched its purpose by passing the measure by a stunning majority--308 to 107--plenty of votes to override a presidential veto. With the 215 Republicans, 93 Democrats broke ranks to vote for the bill. The 66-page measure struck in three directions: at the National Labor Relations (Wagner) Act, at the Norris-La Guardia (anti- injunction) Act, at Communist influence in trade unions. Its chief points were long, strong and sharp. They were nailed down by stern rules and broad new definitions. The only kind of "compulsory unionism" the bill permitted was the union shop.* It would deprive workers of the right to strike over anything but questions of wages, hours, work requirements and work conditions; strikes over any question of union security would be unfair labor practices. These rules drastically revised the so-called "Magna Charta of Labor"--the Wagner Act. By giving employers the right to ask for court injunctions when confronted by an "unlawful strike," the bill drastically revised the Norris-La Guardia Act. It attacked Communist union influence by barring not only Communists, but even ex-Communists and party-liners from holding union office. Organized labor wailed on agony. William Green had declared: "Hartley will be classified as one of the labor's chief enemies." C.I.O. spokesmen called the measure "a poisonous witches' brew." Old New Dealers in Congress echoed them. (*Closed shop: only union members may be hired. Union shop: workers must join the union after they are hired.) (June 23, 1947) If Harry Truman signed the Taft-Hartley labor bill, which Congress had overwhelmingly approved, organized labor would never forgive him. At least that was what labor's spokesmen were telling him. On the other hand, if the President vetoed the bill, he would bear the brunt of public resentment over any new strike crisis. [Truman vetoed the bill, but Congress overrode the veto, and the bill became law. Labor reacted defiantly.] (July 7, 1947) The C.I.O. and A.F.L., working separately but on parallel tracks, opened their legal campaign. There was ample precedent for such tactics. All important laws get their court tests, and labor laws get the most stringent tests of all. Labor would also take determined action on other fronts. Wherever possible, it would evade the law by such devices as forcing under-the-counter closed shops on labor-hungry employers. Wherever it could, it would bypass the law; for example, by disregarding the new NLRB. Across the nation, labor's fight on the Taft-Hartley Act would go on until every sentence had been challenged and bitterly tested. [Organized labor is still trying to have the Taft-Hartley act repealed. Another notable piece of legislation was passed by that Congress.] (March 31, 1947) For the first time in 14 years, Congress last week proposed an amendment to the Constitution of the United States. It concerned presidential tenure. Under its terms, no person can be elected to the presidency for more than two terms, or more than one term if he has served more than two years of another President's unexpired term. Thus the maximum term of any president would be ten years to the day. Gibed the Democrats: the Republicans had finally, and posthumously, been able to defeat Franklin D. Roosevelt for a third term. </body> </article> </text>