Objectives Describe how the United States made the transformation to a peacetime economy. Discuss the accomplishments of Presidents Harry Truman and Dwight Eisenhower. Analyze the 1950s economic boom.

Terms and People demobilization – sending home members of the army GI Bill of Rights – eased the return of World War II veterans by providing education and employment aid baby boom – increase in births between 1945 and 1964

Terms and People (continued) productivity – the rate at which goods are produced or services performed Taft-Hartley Act – a law that restricted the power of labor unions; outlawed the closed shop, a workplace in which only union members can be hired Fair Deal – President Truman’s program to expand New Deal reforms 3

How did the nation experience recovery and economic prosperity after World War II? The GI Bill of Rights, a strong demand for consumer goods, strong labor unions, Cold War defense spending and increased foreign demand for U.S. goods – greatly improved the economy. The U.S became the richest country in the world. It also experienced a shared prosperity that had been unknown anywhere else in world history.

Post War Economic Anxieties Quickly Pass When World War II first ended, what most worried Americans was not the fear of communist expansion. What do you think was it?

Post War Economic Anxieties Quickly Pass (Economic anxieties about a return to the depression .) While there was a short downturn in the economy, within a few months the economy began to pick up and an economic boom that would last well into the 1960s began. So many people were spending money that inflation became the biggest economy worry.

After World War II, many citizens and economists feared the country would fall into a widespread depression. Truman started demobilization, and millions of soldiers came home and searched for work. Contracts to produce military goods were cancelled and millions of defense workers lost their jobs. An end to rationing and price controls – plus a demand for goods – fueled inflation.

The most painful was skyrocketing prices. The post-war U.S. did not experience unemployment or a renewed depression, but it did have serious economic problems. The most painful was skyrocketing prices. Prices rose about 18 percent in 1946, and the prices of some products doubled. 8

To help veterans, the federal government enacted the GI Bill of Rights. Benefit Results The bill provided one year of unemployment pay for veterans unable to find work. The pay helped veterans support themselves and their families. The bill provided financial aid to attend college. Eight million veterans entered or returned to college. The bill entitled veterans to loans for buying homes and starting businesses. There was an upsurge in home construction, which led to explosive growth in suburban areas. 9

“Baby Boom”: With the Great Depression and the war behind them, many returning soldiers quickly married and started families. 10

Baby Boom

The result was a postwar baby boom. Between 1940 and 1955, the U.S. population experienced its greatest increase, growing 27 percent from about 130 to about 165 million. 12

The U.S. became the richest country in the world. When wartime restrictions ended, demand for consumer goods soared. Businesses employed more people to produce goods. This created a cycle in which people bought new goods, leading business to hire more workers, who in turn bought more goods. The postwar years ushered in a period of domestic prosperity that lasted nearly 20 years. The U.S. became the richest country in the world. 13

During the postwar period, the U. S During the postwar period, the U.S. economy benefitted from technological advances, such as atomic power, computers, and plastics. Worker productivity continued to improve, largely because of new technology. The economy also got a boost from federal defense spending for the Korean War and from foreign demand for U.S. goods caused by the Marshall Plan. 14

Between 1945 and 1960, the nation’s gross national product (GNP) more than doubled.

The U.S. faced inflation and labor unrest at home. President Harry Truman had to preside over one of the more difficult times in American history. The Cold War was beginning and there were communist takeovers in Europe and Asia. The U.S. faced inflation and labor unrest at home. 16

The Truman Presidency After the war, President Truman faced the monumental task of shifting America from war to peace. The more than 12 million men still in the military in 1945 wanted to return to their families and jobs, and demobilization occurred rapidly. While some veterans found civilian life difficult, others used GI Bill benefits to build or buy homes, start small businesses, and go to college. Most veterans went into the labor force, taking jobs from more than 2 million women workers.

The Truman Presidency The government dismantled wartime agencies that regulated industry and labor and set price controls, which sparked immediate inflation. This would lead to a wave of strikes and growing discontent among American consumers in late 1945 and throughout 1946.

Truman Proposes a “Fair Deal” Backed by Democratic liberals and unions, Truman in 1945 tried to revive New Deal politics with a program he eventually called the “Fair Deal.” This would improve the social safety net and raise living standards. Truman pressed Congress to hike the minimum wage, create a national health insurance system, and increase public housing, Social Security, and educational aid.

The Postwar Strike Wave and Republican Resurgence The year 1946 was one of labor revolt. The AFL and CIO launched Operation Dixie to bring unions to the South and end the anti-labor conservatism of southern politics, sending hundreds of labor organizers into the region’s textile mills, steel factories, and fields.

The Postwar Strike Wave and Republican Resurgence With no more overtime work for war production, and skyrocketing inflation caused by the end of price controls, workers’ real income dropped sharply. Workers responded by going on strike to demand wage raises – 5 million of them. 750,000 steel workers conducted the largest single strike in US history up to that point. Coalminers and railroad workers struck, too. The strike wave alarmed President Truman, who became hostile to the unions and won an injunction to force striking coal miners back to work.

The Postwar Strike Wave and Republican Resurgence   In the 1946 elections, middle-class voters scared by labor unrest voted Republican, and many workers angry at Truman’s policies stayed at home. The Democrats lost both houses of Congress to the Republicans for the first time since 1920. Operation Dixie capitulated to the opposition of southern employers and white workers’ racism, keeping intact southern political power in Washington. The 1946 elections secured the continuing domination of the Congress by a coalition of conservative southern Democrats and Republicans.

Employers refused to meet labor’s demands. Trade unionists demanded pay increases to keep up with inflation. A newly elected Republican Congress enacted the Taft-Hartley Act over Truman’s veto in 1947. This law weakened unions, by outlawing the closed shop and permitting states to enact “right-to-work” laws.

Truman established a special committee on civil rights to investigate race relations. The committee made several recommendations for reforms, but Congress rejected them all. Truman desegregated the military, which did not need Congressional approval. 24

By spring 1948, Truman’s standing had sunk so low that few thought he could win election that fall. However, Truman managed the political upset of the century, beating three other candidates, two of them from new political parties.

Truman Elected in 1948 Truman Upsets Dewey The Democratic Party was badly divided in 1948. Southern racists, upset with Truman’s civil rights proposals bolted and formed the States-Rights “Dixiecrat” Party. They nominated SC governor, Strom Thurmond. Some liberals, angry over Truman’s strong stand against Soviet actions, reformed the Progressive Party and nominated former VP Henry Wallace. Despite this Truman still won by attacking the “do-nothing Republican Congress.”

But Congress rejected most of Truman’s Fair Deal proposals. Shortly after the election, Truman announced a far-ranging legislative program he called the Fair Deal. The Fair Deal was meant to strengthen existing New Deal reforms and establish new programs, such as national health insurance. But Congress rejected most of Truman’s Fair Deal proposals. 27

Legislative failure and a stalled war in Korea contributed to Truman’s loss of popularity, and he did not seek reelection in 1952. Popular, charming Republican candidate Dwight D. Eisenhower won the presidency that year, beating Democrat Adlai Stevenson. The public believed that Eisenhower would walk the line between liberal and conservative political positions, and he did not disappoint. 28

Eisenhower was a pragmatist who moderated the Republican Party Eisenhower was a pragmatist who moderated the Republican Party. Eisenhower rejected laissez-faire. He created an interstate highway system, expanded Social Security and spent more money on education. His brand of Republicanism became known as “dynamic conservatism” or “modern Republicanism.” The strong U.S economy went a long way toward making his presidency one of the most prosperous, peaceful, and politically tranquil in the 20th century. 29

Eisenhower’s Pragmatic Conservatism: Maintain the Status Quo "Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things, but their number is negligible and they are stupid."---Republican President Dwight Eisenhower

Section Review QuickTake Quiz Know It, Show It Quiz 31