CHAPTER 37 NOTES
[Postwar Economic Anxieties
During the 1930s, unemployment and insecurity had pushed up the suicide rate and decreased the marriage
rate. The population growth was also declining as couples had economic troubles.
In the initial postwar years, the economy struggled; prices elevated 33% from 1946-1947 after the wartime
price controls were removed. An epidemic of strikes swept over the country in 1946.
In 1947, the Republican Congress passed the Taft-Hartley Act over President Truman's veto. It outlawed
the "closed" (all-union) shop, made unions liable for damages that resulted from jurisdictional disputes
among themselves, and required union leaders to take a noncommunist oath. Taft-Hartley was just one of
several obstacles that slowed the growth of organized labor in the years following WWII.
The CIO's "Operation Dixie," aimed at unionizing southern textile workers and steelworkers, failed in
1948 to overcome lingering fears of racial mixing.
Congress passed the Employment Act in 1946 to promote maximum employment, production, and
purchasing power. It also created a 3-member Council of Economic Advisers to provide the president
with the data and the recommendations to make that policy a reality.
The Servicemen's Readjustment Act of 1944, better known as the GI Bill of Rights or the GI Bill, made
generous provisions for sending the former solders to school. By raising educational levels and stimulating
the construction industry, the GI Bill powerfully nurtured the long-lived economic expansion that took hold
]
in the late 1940s.
The Long Economic Boom, 1950-1970
In the 1950s, the American economy entered a twenty-year period of tremendous growth. During the
1950s and 1960s, national income nearly doubled, giving Americans about 40% of the planet's wealth. The
post-World War II era transformed the lives of a majority of citizens and molded the agenda of politics and
society for at least two generations. Prosperity underwrote social mobility; it paved the war for the success
of the civil rights movement; it funded new welfare programs; and it gave Americans the confidence to
exercise unprecedented international leadership in the Cold War era.
The size of the middle class doubled from pre-Great Depression days, including 60% of the population by
the mid 1950s.
The majority of new jobs created in the postwar era went to women, as the service sector of the economy
dramatically outgrew the old industrial and manufacturing sectors.
The Roots of Postwar Economy
The economic upturn of 1950 was fueled by massive appropriations for the Korean War and defense
spending. The military budget helped jumpstart high-technology industries such as aerospace, plastics,
and electronics. Cheap energy also fueled the economic boom. American and European companies
controlled the flow of abundant petroleum from the expanses of the Middle East, and they kept prices low.
Gains in productivity were enhanced the rising educational level for the work force. By 1970, nearly 90%
of the school-age population was enrolled in educational institutions.
The work force shifted out of agriculture, which was achieving higher productivity gains as a result of new,
more efficient farming equipment.
The Smiling Sunbelt
In the 30 years after WWII, an average of 30 million people changed residence every year. Families
especially felt the strain, as distance divided them.
The "Sunbelt", a 15-state area stretching from Virginia through Florida and Texas to Arizona and
California, increased it population at a rate nearly double than that of the old industrial zones of the
Northeast (the "Frostbelt"). In the 1950s, California alone accounted for 1/5 of the nation's population.
The modern pioneers came in search of jobs, better climate, and lower taxes. The large amount of federal
dollars being given to the Sunbelt states accounted for much of the Sunbelt's prosperity. The industry
region of the Ohio Valley (the "Rustbelt") was especially hit hard as a result of the loss in funds and
population.
The Rush to the Suburbs
In all regions, America's modern white migrants moved from the city to the new suburbs. The Federal
Housing Administration (FHA) and Veterans Administration (VA) made home-loan guarantees,
making it more economically attractive to own a home in the suburbs rather than to rent an apartment in the
city.
"White flight" to the suburbs and the migration of blacks from the South left the inner cities, especially
those in the Northeast and Midwest, to become poverty-stricken. The FHA often refused blacks home
mortgages for private home purchases, thus limiting black mobility out of the inner cities.
The Postwar Baby Boom
In the decade and a half after 1945, the birth rate in the United States exploded as the "baby boom" took
place. More than 50 million babies were born by the end of the 1950s. By 1973, the birth rates had
dropped below the point necessary to maintain existing population figures.
Truman: The "Gutty" Man from Missouri
The first president without a college education in many years, President Harry S Truman was known as
"average man's average man." He had down-home authenticity, few pretensions, rock-solid probity, and
the political ability called "moxie" - the ability to face difficulty with courage.
Yalta: Bargain or Betrayal?
February 1945, the Big Three (Roosevelt, Churchill, and Stalin) met in Yalta to discuss the war's end.
Final plans were laid for smashing the German lines and shackling the beaten Axis enemy. Stalin agreed
that Poland, with revised boundaries, should have a representative government based on free elections-a
pledge he soon broke. Bulgaria and Romania were likewise to have free elections-a pledge also broken.
The Big Three also announced plans for fashioning a new international peacekeeping organization-the
United Nations.
The most controversial decision concerned the Far East. With the atomic bomb not yet tested,
Washington analysts expected high American casualties in the assault on Japan. Roosevelt felt that Stalin
should enter the Asian war, pin down Japanese troops in Manchuria and Korea, and lighten American
losses. But with Soviet casualties already extremely high, Stalin needed incentive to join in the Far East.
Stalin agreed to attack Japan within 3 months after the collapse of Germany. In return, the Soviets were
promised the southern half of Sakhalin Island, lost by Russia to Japan in 1905, and Japan's Kurile Islands.
The Soviet Union was also granted control over the railroads of China's Manchuria and special privileges in
the two key seaports of that area, Dairen and Port Arthur. These concessions gave Stalin control over
vital industrial centers of America's weakening Chinese ally.
The United States and the Soviet Union
The United States terminated vital lend lease aid to a battered USSR in 1945 and ignored Moscow's plea
for a $6 billion reconstruction loan-while approving a similar loan of $3.75 billion to Britain in 1946.
Different visions of the postwar world separated the two superpowers. Stalin aimed above all to guarantee
the security of the Soviet Union. He made it clear from the outset of the war that he was determined to
have friendly governments along the Soviet western border. By maintaining a Soviet sphere of influence
in Eastern and Central Europe, the USSR could protect itself and consolidate its revolutionary base as the
world's leading communist country.
These spheres of influence contradicted President FDR's Wilsonian dream of an "open world,"
decolonized, demilitarized, and democratized.
Unaccustomed to their great-power roles, the Soviet Union and the United States provoked each other into
a tense, 40-year standoff known as the Cold War.
Shaping the Postwar World
In 1944, the Western Allies met at Bretton Woods, New Hampshire and established the International
Monetary Fund (IMF) to encourage world trade by regulating currency exchange rates. They also
founded the International Bank for Reconstruction and Development (World Bank) to promote
economic growth in war-ravaged and underdeveloped areas. Unlike after WWI, the United States took the
lead in creating the important international bodies and supplied most of their funding after WWII. The
Soviets declined to participate.
The United Nations Conference opened on April 25, 1945. Meeting at the San Francisco War Memorial
Opera House, representatives from 50 nations made the United Nations charter. It included the Security
Council, dominated by the Big Five powers (the United States, Britain, the USSR, France, and China),
each of whom had the right of veto, and the Assembly, which could be controlled by smaller countries.
The Senate overwhelmingly passed the document on July 28, 1945.
Through such arms as the UNESCO (United Nations Educational, Scientific, and Cultural Organization),
FAO (Food and Agricultural Organization), and WHO (World Health Organization), the U.N. brought
benefits to people around the world.
In 1946, Bernard Baruch called for a U.N. agency, free from the great-power veto, with worldwide
authority over atomic energy, weapons, and research. The plan quickly fell apart as neither the United
States nor the Soviet Union wanted to give up their nuclear weapons.
The Problem of Germany
At Nuremberg, Germany from 1945-1946, Nazi leaders were tried and punished for war crimes.
Punishments included hangings and long jail times.
Beyond the Nuremberg Trials, the Allies could agree little about postwar Germany. At first, Americans
wanted to dismantle German factories and reduce the country to nothing. The Soviets, denied of American
economic assistance, were determined to rebuild their nation through reparations from Germany.
Eventually, Americans realized that a flourishing German economy was indispensable to the recovery of
Europe. The Soviets refused to realize this.
At the end of the war, Austria and Germany had been divided into 4 military occupation zones, each
assigned to one of the Big Four powers (France, Britain, America, and the USSR).
As the USSR spread communism to its Eastern zone in Germany and the Western Allies promoted the idea
of a reunited Germany, Germany became divided. West Germany eventually became an independent
country, and East Germany became bound the Soviet Union as an independent "satellite" state, shutoff
from the Western world by the "iron curtain" of the Soviet Union.
Berlin, still occupied by the Four Big powers, was completely surrounded by the Soviet Occupation Zone.
In 1948, following controversies over German currency reform and four-power control, the Soviet Union
attempted to starve the Allies out of Berlin by cutting off all rail and highway access to the city. In May
1949, after America had flown in many supplies, the blockade was lifted.
In 1949, the governments of East and West Germany were established.
Crystallizing the War
In 1946, Stalin, seeking oil concessions, broke an agreement to remove his troops from Iran's
northernmost province. He used the troops to aid a rebel movement. When Truman protested, Stalin
backed down.
In 1947, George F. Kennan formulated the "containment doctrine." This concept stated that Russia,
whether tsarist or communist, was relentlessly expansionary. Kennan argued that the Soviet Union was
also cautious, and the flow of Soviet power could be stemmed by firm and vigilant containment.
President Truman embraced the policy in 1947 when he stated that Britain could no longer bear the
financial and military burden of defending Greece against communist pressures. If Greece fell, Turkey and
the rest of the eastern Mediterranean would collapse to the Soviet Union.
On March 12, 1947, President Truman came before Congress and requested support for the Truman
Doctrine. He declared that it must be the policy of the United States to aid any country that was resisting
communist aggression.
In 1947, France, Italy, and Germany were all suffering from the hunger and economic chaos caused in that
year. Secretary of State George C. Marshall invited the Europeans to get together and work out a joint
plan for their economic recovery. If they did so, then the United States would provide substantial financial
assistance. Marshall offered the same aid to the Soviet Union and its allies, but the Soviets refused it.
Although quite expensive, legislators passed the plan after realizing that the United States had to get
Europe back on its feet. Within a few years, Europe's economy was flourishing. The Marshall Plan led to
the eventual creation of the European Community (EC).
Access to Middle Eastern oil was crucial to the European recovery program and to the health of the U.S.
economy. Despite threats from the Arab nations to cut off the supply of oil, President Truman officially
recognized the state of Israel on May 14, 1948.
America Begins to Rearm
The Cold War, the struggle to contain Soviet communism, was not a war, yet it was not a peace.
In 1947, Congress passed the National Security Act, creating the Department of Defense. The
department was headed by a new cabinet officer, the secretary of defense. Under the secretary were the
civilian secretaries of the navy, the army, and the air force. The uniformed heads of each service were
brought together as the Joint Chiefs of Staff.
The National Security Act also established the National Security Council (NSC) to advise the president
on security matters and the Central Intelligence Agency (CIA) to coordinate the government's foreign
fact-gathering.
In 1948, the United States joined the European pact, called the North Atlantic Treaty Organization
(NATO). American participation strengthened the policy of containing the Soviet Union and provided a
framework for the reintegration of Germany into the European family. The pact pledged each signed
nation to regard an attack on one as an attack on all. The Senate passed the treaty on July 21, 1949.
The NATO pact marked a dramatic departure from American diplomatic convention, a gigantic boost for
European unification, and a significant step in the militarization of the Cold War.
Reconstruction and Revolution in Asia
General Douglas MacArthur took control of the democratization of Japan. The Japanese people cooperated
to an astonishing degree; they saw that good behavior and the adoption of democracy would speed the end
of the occupation. In 1946, a MacArthur-dictated constitution was adopted. It renounced militarism and
introduced western-style democratic government.
From 1946-1948, top Japanese "war criminals" were tried in Tokyo.
Although there was much success in Japan, China was another story. In late 1949, the Chinese Nationalist
government of Generalissimo Jiang Jieshi was forced to flee the country to the island of Formosa
(Taiwan) when the communists, led by Mao Zedong, swept over the country. The collapse of Nationalist
China was a depressing loss for America and its allies in the Cold War as ¼ of the world's population fell to
communism.
In September 1949, the Soviet Union exploded its first atomic bomb, 3 years before experts thought
possible. To stay one step ahead, Truman ordered the development of the H-bomb (Hydrogen Bomb).
The first H-bomb was exploded in 1952. The Soviets exploded their first H-bomb in 1953, and the nuclear
arms race entered a dangerously competitive cycle.
Feeling Out Alleged Communists
In 1947, President Truman launched the Loyalty Review Board to investigate the possibility of communist
spies in the government.
In 1949, 11 communists were sent to prison for violating the Smith Act of 1940 (first antisedition law since
1798) in advocating the overthrow of the American government. The ruling was upheld in Dennis v.
United States (1951).
In 1938, the House of Representatives established the Committee on Un-American Activities (HUAC) to
investigate "subversion." In 1948, Congressman Richard M. Nixon led the hunt for and eventual
conviction of Alger Hiss, a prominent ex-New Dealer and a distinguished member of the "eastern
establishment." Americans began to join in on the hunt for communist spies of who were thought to riddle
America.
In 1950, Truman vetoed the McCarran Internal Security Bill, which authorized the president to arrest
and detain suspicious people during an "internal security emergency." Congress overrode Truman's veto
and passed the bill.
In 1951, Julius and Ethel Rosenberg were convicted and sentenced to death for stealing American atomic
bomb plans and selling them to the Soviet Union. They were the only people in history to be sentenced to
death for espionage.
Democratic Divisions in 1948
In 1948, the Republicans chose Thomas E. Dewey to run for president. After war hero Dwight D.
Eisenhower chose not to run for the presidency, the Democrats chose Truman. Truman's nomination split
the Democratic Party. Southern Democrats met and nominated Governor J. Strom Thurmond. The new
Progressive party nominated Henry A. Wallace. Expected to lose, but not ready to give up, Truman
traveled the country, giving energetic speeches. On Election Day, Truman, although not winning the
popular vote, beat Dewey and was reelected as president. Truman's victory came from the votes of
farmers, workers, and blacks.
President Truman called for a "bold new program" ("Point Four"). The plan was to lend U.S. money and
technical aid to underdeveloped lands to help them help themselves. He wanted to spend millions to keep
underprivileged people from becoming communists.
At home, Truman outlined a "Fair Deal" program in 1949. It called for improved housing, full
employment, a higher minimum wage, better farm price supports, new TVAs, and an extension of Social
Security. The only major successes came in raising the minimum wage, providing for public housing in the
Housing Act of 1949, and extending old-age insurance to many more beneficiaries in the Social Security
Act of 1950.
