Truman and the economy

• The Marshall Plan was designed to rebuild Europe's economy, but it also had political goals.
• Truman believed that the US needed to take an active role in shaping post-war Europe to prevent communism from spreading.
• The Marshall Plan provided economic aid to European countries, including food, fuel, machinery, and raw materials.
• What year was the GI Bill of Rights

  1944
• GI Bill of Rights

  • Provided education, training and unemployment pay to ex-servicemen
  • Provided loans to encourage entrepreneurship and business creation
  • Upskilled millions of people
• The GI Bill was expensive costing $20billion over a decade
• The investment in the GI Bill was paid back many times over
• In the 1946 mid-term elections, Republican victory signified a lack of confidence in and support for Truman
• In the 1946 mid-term elections, Truman had to deal with an uncooperative ‘do nothing‘ congress for 2 years which would hinder his attempts to stimulate the economy as he wished
• A divided ruling party would reduce economic confidence in Truman's America
• Division led to a lack of economic coherence as Liberal Democrats wanted Truman to continue FDR's work whilst moderate Democrats sided with the Republicans on issues such as union rights
• USA would have to pay to rebuild exhausted and bankrupted wartime allies - this would be expensive
• The USA was owed billions of dollars worth of war debt by their allies
• Post-war reconstruction


  Opportunity to boost US agriculture and manufacturing whilst helping her wartime allies recover
• 22nd Amendment


  Restricts the power of the President by limiting their time in office
• Longer term economic plans and policies

  Harder to implement as the President will be changed in two terms times
• Increasing power of the legislature (Congress)

  May undermine economic confidence in the executive (President) and it may hinder, amend or block their economic plans
• Truman found it hard to navigate between the two wings of his party, making him appear weak, which would undermine economic confidence
• The cost of fighting the Cold War and trying to contain the spread of communism was massive
• The 1947, Marshall plan cost 17 billion and the NSC 68 recommended massive increases in military spending
• However, the Marshall plan created a captive market for American products which boosted the economy
• Huge increases in defence spending were a form of investment in very high-tech industries and jobs which would boost the US economy
• The costs of losing the Cold War outweighed the costs of fighting the Cold War
• Rapid demobilisation could lead to rises in unemployment and inflation as soldiers returned with unspent wartime wages, which would create huge demands for products and commodities e.g. cars, housing, but with limited supply as it took time to privatize federalise businesses
• Dealing with unemployed soldiers would be expensive - 1944 GI bill cost 20 billion over 10 years
• The return of soldiers would provide an economic boost though and stimulate a boom in industries and manufacturing postwar
• The slow return of soldiers was unpopular with the public and part of the reason why Truman lost the 1946 midterm elections was the 'no boats, no votes campaign'
• Losing Congress would reduce confidence in Truman
• Inflation would cause the cost of living to increase
• Wages failing to keep up with the prices led to industrial disputes and strikes, which would constrain the American economy
• It took time to privatise federalised industries and return the USA to domestic production, which would mean that demand outstripped supply, which would create inflation
• The return of soldiers with their unspent wartime wages, the economic assistance given to them postwar and their desire to start families would also create supply and demand issues, causing inflation
• The baby-boom would create inflationary pressure as demand for new housing, cars and related baby products, initially outstripped demand
• 'Baby Boom'

  • encouraged massive investment and expansion of business to cope with these new demands
  • Created a huge economic stimulus as new parents bought these products and created many many new consumers in the future which further stimulated economic growth, way beyond Truman’s era
• What was the number of houses Truman’s 1949 housing act had built by 1952?

  156,000
• Truman reduced the army from 12 million to 3 million by 1946
• What was the name of the 1947 act to curb union power that was introduced by newly Republican Congress in 1947?

  Taft-Hartley Act

  (Truman vetoed the act, but Congress overrode his veto)
• What was the rate of inflation from 1945 to 1946?

  25%
• What was the number of Trumans 1952 executive order that federalised steel mills stop steel workers were striking during the Korean War?

  10340
• The hourly minimum wage increase to this by 1949, when Truman amended the fair labour standards act of 1938


  $0.75