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

Apparently, we cannot end wars, even as much as people talk about it. That’s partially because, along with the violence of war, there is also profit. The causes of the Second World War were complicated, like most conflicts. But it’s clear that many of the people in power, across nations, believed that entering the war would benefit their 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 emerged.

A look at the background will help illustrate how various nations had similar economic motives as they mobilized (prepared) for war. For starters, the Great Depression had just caused a global crisis. Germany, still hurting from their defeat in WWI, had been hit especially hard. When Adolf Hitler promised to end the economic suffering and humiliation of the German people, his political party rose to power. To create jobs— which the economy desperately needed—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 might to invade neighboring countries. There, he’d take resources and industrial goods to further his vision of a Greater Germany. Of course, his vision also demanded the racial and ethnic “purity” of this expanded area. This plan also 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—essentially slaves—to the German war machine. So too were minority groups within Germany.

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.

On the other side of the world, Japan was having similar issues. The Depression had caused widespread poverty during this time. Japan had few natural resources. The government was in debt. Wanting to be less dependent on foreign markets for oil and rubber, the Japanese established colonies in Korea and Manchuria to get access to these valuable resources—to use and to sell. The United States did not approve of this takeover. So they embargoed (blocked) Japan’s oil exports in 1940 to slow their economic plan. Japan sped up plans to attack Indonesia and the Philippines for even more resources. Again, the U.S. placed 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 dramatic steps to achieve it.

Allied powers

With Axis powers—Germany, Italy, and Japan—clearly mobilizing for war, the Allies—the U.S., U.K., France and Soviet Russia—prepared for another global conflict. Soviet Russia (U.S.S.R.), fearing German attacks, used the peacetime economy to build up their military—just as Germany had done. From 1938 to 1941, Russian leader Joseph Stalin doubled the size of his army to five million troops. To pay for it, all Russian households had to consume 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, including farms and the food they produced. This level of government control gave the U.S.S.R. an advantage when it came to mobilizing its resources and industrial labor for war. Most nations struggled to adapt to the total war economy. However, Russia’s command economy was already close to that concept. It was easier to require citizens and businesses 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 priorities had begun even before the
U.S. actively entered the war in December of 1941, when Japan attacked the U.S. air base Pearl Harbor. President Roosevelt had signed legislation nine months earlier to create the Lend-Lease program. 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

When the Japanese bombed Pearl Harbor, 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 make an effort and move toward a—you guessed it—total war economy. The government gave incentives to private companies to transform their manufacturing plants. Soon they were 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, at every level of society, was asked to pitch in and sacrifice 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, and closed factories reopened. Millions of jobs were created in both private businesses and in the public sphere. Tanks began to roll out of car factories. Assembly lines that used to make vacuums and kitchen appliances started turning out bombs. In order to stabilize the economy, the government controlled both wages and prices. As millions of men went off to war in Europe and the Pacific, housewives, students, and retired people took up the jobs they left behind. Two-thirds of the American economy had been pushed into the war effort by the end of 1943. Unemployment dropped to record lows. Even scientists, such as physicists and chemists, expanded their research. They developed 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 to meet the needs of war. The food shortage was even worse for the British than the people in the U.S. Rationing became essential. Britain also relied on Canada for dairy and meat products. So even though Canada started producing much more food during the war, 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 agricultural labor. It brought tens of thousands of British women from the cities to rural areas to serve as “land girls.” Rural areas were safer places to be anyway since the Germans were targeting cities with large civilian populations. That’s why hundreds of thousands of children were also evacuated to rural areas of the island for safety. In total, more than 450,000 British civilians lost their lives.

The empire advantage

Island though it was, the United Kingdom controlled the world’s largest empire. That meant its total war economy had a global reach. The U.K. used its influence to aid 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. In addition to soldiers, members of the empire had skilled people, provisions, 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 ability to mobilize this enormous military-industrial capacity is a major part of how they survived the war.

In India alone, over 2.5 million subjects were recruited to fight in the war in a variety of African, Asian, and European countries. Over 150,000 non-British subjects gave their lives for the British Empire, even as political leaders in Africa and in India were organizing movements to free themselves from British rule. Wartime disruptions had caused severe food shortages. They led to a famine that killed hundreds of thousands there. On various global battlefields, the Indian subcontinent sacrificed 87,000 soldiers. The economic and human costs of war were unbearably high for millions more colonial people who were wounded, widowed, and orphaned.

Conclusion

It’s impossible to argue with the old saying: “War is hell.” In the paragraphs above, we’ve only glimpsed a portion of the death toll of the Second World War. We have not mentioned genocide of Jewish people, the bombings of Hiroshima and Nagasaki, and the 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 the pursuit of economic prosperity can leave terrible devastation in its wake.

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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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