Economics in the Second World War

By Whitney Howarth
Money is a factor in most wars, but WWII took it to another level. Here is a look at how so many of the nations in this devastating conflict came to embrace the idea of a “total war” economy.

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Propaganda artwork represents the British Commonwealth of Nations. There are soldiers from India, East Africa, South Africa, New Zealand, a Canadian airman, an Australian soldier and a Royal Navy sailor. The men stand proudly together, holding rifles over their shoulders. There is a union jack flag in the background.

Mobilizing for War

Many people say they want world peace. Still, wars seem to keep happening. The causes of the Second World War were complicated, like most conflicts. But it’s clear that many nations’ leaders believed that entering the war would benefit their nation’s economy. It wasn’t just about sending soldiers to fight. Citizens, businesses, and the rest of a nation’s infrastructure revolved around the war effort. A total war economy was created.

A look at the background will help illustrate each country’s reasons for war. First, the Great Depression had just caused a worldwide disaster. Germany had been defeated in WWI. It was hit especially hard. Adolf Hitler promised to end the suffering and humiliation of the German people. Soon his political party rose to power. The economy desperately needed work. To create jobs, Hitler’s government increased military spending. German businesses were given profitable government contracts. One part of Hitler’s plan was to use this new military power to take over nearby countries. He’d use resources and industrial goods from those places. These would help his vision of a Greater Germany. Of course, his vision also demanded racial and ethnic “purity.” In other words, only certain white people would benefit from the success. He called for the removal or killing of many of the populations of the conquered regions. Some of the people of these countries were also forced to become unpaid laborers—they were basically enslaved. So too were minority groups within Germany. All worked for the German war machine.

A black and white photograph of many people, marching down the street holding brooms in their hands. Behind them are several large buildings.
Forced laborers in German-occupied Lithuania. Bild Bundesarchiv, CC BY-SA 3.0.

Japan was having similar problems. The Depression had caused great poverty during this time. Japan had few natural resources. The government was in debt. It aimed to depend less on foreign countries for oil and rubber. So, the Japanese established colonies in Korea and Manchuria. Here it could get these important resources to use and to sell. The United States did not approve of this takeover. So they embargoed, or blocked, Japan’s oil exports in 1940. It would slow their economic plan. Japan sped up plans to attack Indonesia and the Philippines for even more resources. Again, the U.S. responded with severe restrictions. Japan raised the stakes with its attack on Pearl Harbor on December 7, 1941. The action put them at war with the U.S. Japan’s prime minister at the time, General Tojo, also commanded the military. As with Germany, he believed Japan needed a total war economy. Tojo took great steps to achieve it.

Allied powers

Germany, Italy, and Japan were known as the Axis powers. They clearly were mobilizing for war. So the Allies—the U.S., United Kingdom, France, and Soviet Russia—prepared for another global conflict. Soviet Russia, also known as the U.S.S.R., feared German attacks. So they used the peacetime economy to build up their military. It was just like Germany had done. From 1938 to 1941, Russian leader Joseph Stalin doubled the size of his army. It now had five million troops. To pay for it, all Russians had to use less food, fuel and other resources. This would not have gone as smoothly in most nations. But Soviet Russia had a “command economy.” It gave the state control of all industries. The farms and food they produced were controlled by the government. This gave the U.S.S.R. an advantage in mobilizing its resources and industrial labor for war. Russia’s citizens and businesses were already so close to the concept of total war. It was easier to join the war effort.

Photograph of three children, sitting at a small desk, smiling and holding their lunch as if about to take a bite. They sit outside, next to a pile of rubble.
Children in a bombed-out British school eating food from the US sent as part of the lend-lease program. By Ministry of Information Photo Division Photographer, public domain.

The economy in the United States was another story. A clear shift in economic goals had begun even before the U.S. actively entered the war in December of 1941. That month Japan attacked the U.S. air base Pearl Harbor. President Roosevelt had helped create the Lend-Lease program months earlier. This allowed the U.S. to supply warships, planes, and weaponry (and food for civilians) to help the Allied nations. It meant that long before officially joining the fight, the U.S. was already participating. The Lend-Lease program aimed to make the United States into what Roosevelt called “the great arsenal of democracy.”

Total war economy

In 1941, the Japanese bombed Pearl Harbor. Quickly the U.S. declared war on both Japan and Germany. As with so many other nations, it was not just about sending soldiers and weapons. The U.S. wanted all of its citizens to work toward a total war economy. The government basically gave money to private companies if they transformed their manufacturing plants. Soon these became centers of production for weapons, airplanes, and ships. All citizens were asked to ration, or carefully control, their use of certain resources. They supported the war effort by collecting scraps of rubber, paper, and metals. Every person was asked to pitch in for the cause.

Before the war, the U.S. economy was like most other countries: trying to rebuild from the Depression.
Suddenly, it was doing great. Production sped up. New factories were built. Closed factories were reopened. Millions of jobs were created in both private business and the government. Tanks began to roll out of car factories. Assembly lines that used to make vacuums and kitchen appliances started making bombs. To keep the economy stable, the government controlled both wages and prices. Millions of men went off to war in Europe and the Pacific. Meanwhile, housewives, students, and retired people took up the jobs they left behind. Two-thirds of the American economy became part of the war effort by the end of 1943. Unemployment dropped to record lows. Even scientists expanded their research to develop new weapons and technologies that might give the U.S. military a greater advantage. One result of this was the Manhattan Project. It produced the first nuclear weapons.

Over in the United Kingdom and Canada, similar economic changes were made. The food shortage was even worse for the British than the people in the U.S. Rationing became necessary. Britain also relied on Canada for dairy and meat products. Canada was producing much more food during the war. However, Canadians still had to ration their own use of it. This was so they could keep feeding British citizens, who desperately needed more resources.

Within the U.K. there was a desperate need for farm labor. It brought tens of thousands of British women from the cities. They moved to rural areas to serve as “land girls.” Rural areas were safer places to be anyway. The Germans were targeting cities. That’s also why hundreds of thousands of children were also moved to rural areas of the island for safety. In total, more than 450,000 British civilians lost their lives.

The empire advantage

The United Kingdom controlled the world’s largest empire. The U.K. used its influence to help in the fight. During the war, the U.K. imported oil for military use from Persia, Iraq, and North America. Over 15 million subjects joined the British forces in the Allied fight against the Axis Powers. Beyond soldiers, members of the empire had skilled people, food, industrial materials, and natural resources that Britain needed. This network of support stretched from Australia to the Caribbean, from East Africa to India. Britain’s use of its empire like this is a major part of how they survived the war.

In India alone, over 2.5 million subjects were forced into war. They fought in various African, Asian, and European countries. Over 150,000 non-British subjects died for the British Empire. At the time, too, political leaders in Africa and in India were already organizing movements to free themselves from British rule. Wartime disruptions had caused severe food shortages. They led to a famine. Hundreds of thousands died there. On various global battlefields, the Indian subcontinent sacrificed 87,000 soldiers. The costs of war were unbearably high for millions of colonial people. Many were wounded, widowed, and orphaned.

Conclusion

It’s impossible to argue with the old saying: “War is hell.” We’ve only discussed part of the death toll of the Second World War. We have not mentioned the genocide of Jewish people. Nor have we discussed the bombings of Hiroshima and Nagasaki. There were many other horrors of this massive war. Economics, on its own, does not sound like a violent topic. Yet we see countless examples in this war and others that aiming for economic growth can cause terrible devastation.

Sources

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“Research Starters: Worldwide Deaths in World War II.” (n.d.). The National WWII Museum, New Orleans, n.d.
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Roland, Charles G. “Scenes of Hunger and Starvation.” Courage Under Siege: Disease, Starvation and Death in the Warsaw Ghetto. New York: Oxford University Press, 99-104, 1992.

Whitney Howarth

Whitney Howarth, is an Associate Professor of History at Plymouth State University where she specializes in modern world history and the history of India. Dr. Howarth has taught world history at the college level since 1999 and was, for nearly a decade, a research fellow at Northeastern’s World History Center, where she assisted in the research, design and creation of professional development programs for high school world history teachers, hosted seminars by top world historical scholars, and produced multi-media publications (1995-2004).

Image Credits

Creative Commons This work is licensed under CC BY 4.0 except for the following:

Cover: The British Commonwealth of Nations - together. U.S. National Archives and Records Administration. https://commons.wikimedia.org/wiki/File:The_British_Commonwealth_of_Nations_-_together_44-pf-437-2016-001-ac.jpg

Forced laborers in German-occupied Lithuania. Bild Bundesarchiv, CC BY-SA 3.0. https://commons.wikimedia.org/wiki/File:Bundesarchiv_Bild_146-1994-090-06A,_Lettland,_Riga,_Frauen_auf_Weg_zum_Arbeitseinsatz.jpg

Children in a bombed-out British school eating food from the US sent as part of the lend-lease program. By Ministry of Information Photo Division Photographer, public domain. https://commons.wikimedia.org/wiki/File:Aid_From_America-_Lend-lease_Food,_London,_England,_1941_D4322.jpg

A poster advertising Canada’s contribution to the British war effort, public domain. https://commons.wikimedia.org/wiki/File:The_Empire%27s_Strength_-_Do_You_Know_That_Canada..._Art.IWMPST16003.jpg


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