War economy

Poster issued during the First World War by the educational division of the U.S. Food Administration

In mobilizing for World War I, the United States expanded its governmental powers by creating institutions such as the War Industries Board (WIB) to help with military production.[4] Others, such as the Fuel Administration, introduced daylight saving time in an effort to save coal and oil while the Food Administration encouraged higher grain production and "mobilized a spirit of self-sacrifice rather than mandatory rationing."[4] Propaganda also played a large part in garnering support for topics ranging from tax initiatives to food conservation. Speaking on Four Minute Men, volunteers who rallied the public through short speeches, investigative journalist George Creel stated that the idea was extremely popular and the program saw thousands of volunteers throughout the states.[5]

Mass production of Consolidated B-32 Dominator airplanes at Consolidated Aircraft Plant No. 4, near Fort Worth, Texas, during World War II.

In the case of the Second World War, the U.S. government took similar measures in increasing its control over the economy. The Fall of France and the shifting of the front line into the English Channel with the outcome of the looming Battle of Britain uncertain provided the spark needed to begin conversion to a wartime economy with the passing of the Two-Ocean Navy Act in July 1940. The subsequent Attack on Pearl Harbor prolonged and expanded the measures. The Washington felt that a greater bureaucracy was needed to help with mobilization.[6] The government raised taxes which paid for half of the war's costs and borrowed money in the form of war bonds to cover the rest of the bill.[4] "Commercial institutions like banks also bought billions of dollars of bonds and other treasury paper, holding more than $24 billion at the war's end."[6] The creation of a handful of agencies helped funnel resources towards the war effort. One prominent agency was the War Production Board (WPB), which "awarded defense contracts, allocated scarce resources – such as rubber, copper, and oil – for military uses, and persuaded businesses to convert to military production."[4]

The United States mass-produced many vehicles, such as ships (i.e. Liberty Ships), aircraft (i.e. North American P-51 Mustang), jeeps (i.e. Willys MB) and tanks (i.e. M4 Sherman).

Two-thirds of the American economy had been integrated into the war effort by the end of 1943.[4] Because of this massive cooperation between government and private entities, it could be argued that the economic measures enacted prior to and during the Second World War helped lead the Allies to victory.

The United States has been involved in numerous military endeavours within the Middle East and Latin America since the 1960s. Having been in a continuous state of war since the September 11 attacks,[7] they have an annual military budget larger than India, China, Russia, United Kingdom, Germany, Saudi Arabia, and France’s military budgets combined.

Germany has experienced economic devastation following both World Wars. While this was not a result of faulty economic planning, it is important to understand the ways that Germany approached reconstruction. In World War I, the German agricultural sector was hit hard by the demands of the war effort. Not only were many of the workers conscripted, but much of the food itself was allocated for the troops leading to a shortage.[8] "German authorities were not able to solve the food scarcity [problem], but implemented a food rationing system and several price ceilings to prevent speculation and profiteering. Unfortunately, these measures did not have the desired success."[8]

Heading into the Second World War, the Nazis introduced new policies that not only caused the unemployment rate to drop, it created a competent war machine in clear violation of the Treaty of Versailles. The Third Reich implemented a draft and built factories to supply its quickly expanding military. Both of these actions created jobs for many Germans who had been struggling from the economic collapse following World War I.[9] However, it is worth noting that while unemployment rates plummeted, "by 1939, government debt stood at over 40 billion Reichsmarks (equivalent to 178 billion 2021 euros)."[9] After World War II, Germany was discovered to have exploited the economies of the countries it invaded. The most important among these, according to historians Boldorf and Scherner, was France and "her highly developed economy... [being] one of the biggest in Europe."[10] This is further supported when they later reveal how the French economy provided for 11 percent of Germany's national income (during the occupation) which covered five months of Germany's total income for the war. Using extortion and forced labor, the Nazis siphoned off much of France's economic output. For example, during the early months of the Nazi occupation, the French puppet government was forced to pay a "quartering" fee of twenty million Reichsmarks per day. Supposedly, the fee was payment for the Nazi occupation forces. In reality, the money was used to fuel the Nazi war economy.[10] Germany employed numerous methods to support its war effort. However, due to the Nazis' surrender to the Allies, it is hard to tell what their economic policies would have yielded in the long term.