BUSINESS AND THE WAR

The relationship between the federal government and big business changed dramatically from the days of the Second New Deal. “If you are going to go to war in a capitalist country” observed Secretary of War Henry Stimson, “you had better let business make money out of the process.” As corporate executives flooded into federal agencies concerned with war production, Roosevelt offered incentives to spur production—low-interest loans, tax concessions, and contracts with guaranteed profits. The great bulk of federal spending went to the largest corporations, furthering the long-term trend toward economic concentration. By the end of the war, the 200 biggest industrial companies accounted for almost half of all corporate assets in the United States.

Americans marveled at the achievements of wartime manufacturing. Thousands of aircraft, 100,000 armored vehicles, and 2.5 million trucks rolled off American assembly lines, and entirely new products like synthetic rubber replaced natural resources now controlled by Japan. Government-sponsored scientific research perfected inventions like radar, jet engines, and early computers that helped to win the war and would have a large impact on postwar life. These accomplishments not only made it possible to win a two-front war but also helped to restore the reputation of business and businessmen, which had reached a low point during the Depression.

Federal funds reinvigorated established manufacturing areas and created entirely new industrial centers. World War II saw the West Coast emerge as a focus of military-industrial production. The government invested billions of dollars in the shipyards of Seattle, Portland, and San Francisco and in the steel plants and aircraft factories of southern California. By the war’s end, California had received one-tenth of all federal spending, and Los Angeles had become the nation’s second largest manufacturing center. Nearly 2 million Americans moved to California for jobs in defense-related industries, and millions more passed through for military training and embarkation to the Pacific war.

In the South, the combination of rural out-migration and government investment in military-related factories and shipyards hastened a shift from agricultural to industrial employment. During the war, southern per capita income rose from 60 percent to 70 percent of the national average. But the South remained very poor when the war ended. Much of its rural population still lived in small wooden shacks with no indoor plumbing. The region had only two cities— Houston and New Orleans—with populations exceeding 500,000. Despite the expansion of war production, the South’s economy still relied on agriculture and extractive industries—mining, lumber, oil—or manufacturing linked to farming, like the production of cotton textiles.

М-5 tanks on the assembly line at a Detroit Cadillac plant, in a 1942 photograph. During the war, General Motors and other automakers produced vehicles for the armed forces rather than cars for consumers.

As this map indicates, the military and naval facilities built by the federal government during World War II were concentrated in the South and West, sparking the economic development of these regions.

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