Mobilizing the War Economy

End of the Depression WWII ended the Depression as millions joined the wartime labor force. Once we entered the war, millions of men also volunteered to fight. Supplying goods for Allied troops, and later for our own troops, finally helped to re-stimulate our economy.

FDR realized that the govt FDR realized that the govt. would have to play a big part in coordinating production of war materials if the allies were going to win. They would also have to try and convince the American public that was hungry again to buy goods, that rationing was the only option if we were to win.

Conversion of Industry The auto industry was the first into the war production mode as they stopped making cars for consumers. Cost Plus System – The govt. pays for all development and production cost plus a percentage of that cost as profit for goods produced for the war.

Many businesses wisely used the war to establish a base of loyal customers that lasted long after WWII ended. D. With such a stimulated economy, our unemployment rates began to decrease as industry needed more workers.

Financing the War The US govt. was willing to spend whatever it cost to win the war. Federal Spending increased from $9.4 billion in 1939 to $95.2 billion by 1945. The GNP also doubled by this time. A series of war bond drives helped finance the war to the tune of $135 billion. The rest of the money to finance the war came from a tax increase, loans from banks, investors, and the public.