Economic Impact of WWII

ECONOMIC

IMPACT OF

WORLD WAR II

Soviet Union

The victorious power suffered immensely: 2.5 million were homeless, factories were destroyed, railways disrupted, mechanized farm machinery was non-existent and 28 million had lost their lives. Crucial western food supplies were reached to the Soviet Union through the UN Relief Administration was financed by the United States. The Soviet Union also obtained limited credits from Britain and Sweden.

Stalin had to rely on his own Russian people to aid in rebuild the economy; there was work for the millions demobilized from the Red Army. Coercion (forced) labor was resumed; terror in Stalin’s ruling returned. The Soviets also compelled Eastern Europe that was Soviet-controlled to supply machinery and raw materials. A new set of five-year plans had to be initiated. He began to re-emphasized heavy industry at the expense of consumer goods; heavy burdens were laid on the peasants.

Stalin emphasized heavy industry because he feared that the Western industries would be superior to the Soviet’s industries. Collectives were tightly regular and private plots were taken away. Agricultural production was lower, and food was forcibly taken from the peasantry. Domestic controls were tightened, and the Soviet Union was able to gain more control over their production to help boost their economy to how it was before war and even more successful.

Overall, the damage done by the war was relatively low, lower than that of most of Europe. This was because thanks to the Allied armies that progressed to the north, they were able to quickly restore industrial production and export consumer goods to the rest of Europe. As other countries set up their industrial machinery, the demand for Italian good decreased.

The Marshall Plan in addition to the Italian government used the industrial and financial holdings from the Fascist government to provide capital for industrial modernization. The electric power production had increased as well as wages for employees. The domestic market remained undeveloped due to the poverty of the agrarian south. Although unemployment had decreased, there were still more than four million jobless citizens after war, and this problem could be solved by land reform in the agrarian south which would give land to peasants. Trade unions remained, Communist-controlled.

When needed to combat, there were thousands of men arrested to be part of the military; therefore, the heads of households were not able to support their family. In restricted zones, businesses were closed. Some people lost job due to this. Communications and infrastructure had to be rebuilt; relief from abroad was essential to prevent starvation and was mainly from the United States. The first two years after war was a period of hardship, but it followed with extraordinary production.

Many of the German cities were left in ruins from the massive bombing campaigns during the war. When Germany was first conquering land, their economy was going very well—they were able to buy goods from conquered nations at a very cheap price. After the Allied bombings occurred, German cities suffered greatly with the economy—air raids, blackouts, electrical and water cut offs, low food rations, etc. Germany continued to manufacture useless items such as wall paper till the end of the war, but these were jobs for domestic employees.

War effort continued to be important, but the lack of using women in industries was a failure for the German economy. Germany was destroyed and had lost many military men in war. Many were forced to defend their nations, which led to the high loss of life. The nation was financially destroyed, due to the Nazi’s desperate spending to feed the war machine, even down to the final days of war.

The nation as also disgraced due to the atrocities carried out, especially the Holocaust. Germany and its citizens basically had to start out fresh from almost nothing, which the nation would not be unified till 1990. The nation lost over 7 million civilians in war effort. Industrial output was reduced to less than 1/3 of what it had been before war; the economy could have been much better with more planning and better utilization of resources.

Great Britain’s economy was transformed as many men went to fight and women ended up doing their work. There was a huge growth in the ammunition and aircraft industries while other industries were put on hold to fully support the war effort. A campaign called “Dig for Victory” was made and placed a huge emphasis on food production and farming. The Government knew the British people could be starved out by a sea blockade by the German Navy since much of the food was imported from America so they had to be prepared.

Rationing on petrol was a major aspect in order to support the war effort. In 1941 the Essential Works Order was created to allow the government to conscript people to certain work to prevent shortages of workers. This also created a growth in trade unions and strikes as workers did not want to work in the conditions and yearned for better wages. After the men came home, this created a gap in further employment. Although Great Britain was not only totalitarian rule, the government took control of who worked where, trade, railways, shipping and banking.

Massive government debts were accumulated due to the Lend Lease Act with the United States. Supplies were sold to Britain for 1.075 billion euros using long-term loans from the United States. As the war continued, destruction of factories and machines had a huge impact and by 1945 Britain lost 12% of its production output. Simultaneously, there were numerous scientific advances such as the computer, antibiotics, and jet engines. Towards the end of the war, to revive the economy, the government set up the Beveridge Committee which established a new way of running the economy which would allow almost full employment.

Before World War II, France had a fragmented capitalist economy. They soon realized, after witnessing the economies of the large industrialized countries of the US and Germany, small companies and family owned businesses would not compare up to them as they were not as efficient. Towards the beginning of the war, France was divided as the Germany occupied northern France and the rest of the government was under the puppet fascist regime of Vichy, France. Some sections of the French businesses and authority were lost after collaborating with German occupiers.

During the war before and during German occupation, the French economy operated under a corporatist state. This was an association of people into different groups such as agricultural, business, labor, military, etc. After the Allies invasion of Normandy, General Charles de Gaulle took over the government in Vichy France and said that he would nationalize. credit and electricity. He went on to further strengthen the economy by creating new coal mines, large banks, large insurance companies, and electrical and gas companies.

He made it so that 20% of government control was on the industries. As the war went on, the economy deteriorated to a greater extent as railroads and industries were destroyed, some seized by Germany. Also rationing played a major role in that resources were not obtained easily. After France united again after the war, it saw that it was necessary to fully transform the economy. Inflation was a major problem as prices multiplied greatly during the German occupation.

Jean Monnet made a list of goals for the next five years of what France should accomplish economically. He set target outputs as well as modernized French industry. He established a system of sectors with included manufacturing, transportation, agriculture, etc. This was later known as the Monnet Plan.

At the beginning of the war, the Japanese economy had suffered less from the Great Depression than the other countries worldwide. This allowed their economy to focus more on manufacturing and mining rather than the agricultural aspects. Most of the industrial and economic effort was geared towards military expansion. The Japanese government also wanted to seize natural resources in order to establish economic independence. Especially after the American oil embargo created a crisis in Japan, the Japanese realized that they needed additional locations to garner resources.

These resources included coal from China, sugarcane from the Philippines, and petroleum, rubber, and tin from the Dutch East Indies. One of the aspects that augmented Japanese economic control was the Zaibatsu which was a group of industrial businesses that had influence over a large part of the Japanese economy. The government allowed both private and public businesses but came to the conclusion that the public businesses monitored by the government would support economic growth.

Steel production rose greatly and in time Japanese aircraft industries could manufacture 10,000 aircrafts per year. As the war went on however, the Japanese economy suffered greatly as all needs and industry were meant to support the military needs. Also trade oversees, which Japan depended on, was inhibited by the damage to the Japanese merchant fleet over the course of the war.

By the end of the war, the Japanese economy was struck by shortages, inflation, and currency devaluation. The destruction to all works of the Japanese Economy left Japan at a standstill.

Works Cited

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"Effects of World War II." Effects of World War II. N.p., n.d. Web. 04 Feb. 2013. <http://www2.sunysuffolk.edu/westn/effectww2.html>.

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Five Year Plans!

General Charles de Gaulle

Germany

Great Britain

Destructed

German cities

France

Italy

Japan

Destruction of Japan after WWII

Holocaust

Reaction to Oil Embargo

Some aid to recover from war was supplied by the U.S.: Marshall Plan

Jean Monnet

Rise in debt after WWII.