Postwar Economic Boom
Finally, after ten years of depression and five years of world war, people could just ... live. The boys now men returned home. They married their sweethearts, and family life returned to "normal," even though normal life in 1946 was vastly different from normal life in 1929. What was similar was that in both post war periods, pent up demand for consumer products produced an economic boom, and this time the farmers weren't left behind.
After the first world war ended in 1919, everyone expected the economy to take off. It did. Farmers expected that the wartime demand for their products would continue, so they planted every acre they could. But as the fields of Europe came back into production, American farmers ended up with too much food on the market, and prices dropped dramatically.
After World War II, farmers and their lobbyists remembered and were determined to avoid a post-war slump in the ag economy while the rest of the country prospered.
So, the government kept price controls in place immediately after the war. Through 1946 and ’47, relief programs sent surplus crops overseas. In 1948 and ’49, the Marshall Plan became a massive export subsidy for farmers. There were dire predictions of a recession in 1949, but in 1950 the Korean Conflict began, and once again farmers were called on to supply the troops.
Kelly Holthus felt the post-war boom in his own life. "It just really exploded," he says. "After the war, we started getting refrigeration. I remember my dad buying a car after the war, buying a tractor after the war. After the war was over, it was really pretty prosperous times in agriculture in that area. And it was a complete change, again."
All in all, the late 1940s were good years both for consumers and farmers. You can see that in the numbers.
- Unemployment. When the decade began in 1940, unemployment stood at 14.6 percent of the workforce, a high number but nowhere near as high as the 25 percent who were out of work during the Depression. By 1950, unemployment dropped to only 5.0 percent of the workforce.
- Disposable income is a measure of how much money a person has to spend after paying taxes. In 1940, the average American both on the farm and off had $173 a year (adjusted for inflation at 1964 dollar levels). By 1945, that figure had risen to over $240, and by 1950, to over $260. More money in peoples' pockets meant more money to spend on food.
- Farm Income. Farmers as a whole saw their income rise in the 1940s. Total net farm income after production expenses were taken out rose from $3.5 billion in 1940 to $15.4 billion in 1947.
What the numbers meant to the average American is that he or she could finally buy new consumer products, go to college or start a business. To the average farmer, the post-war economic boom meant that rural life styles finally caught up to urban life in America.
Written by Bill Ganzel, the Ganzel Group. A partial bibliography of sources is here.