Preparing the Economy for War

Homefront Security

During World War II, millions of American civilians were recruited by civil defense government programs to serve as volunteers and aid the war effort.

Learning Objectives

Examine the role of the Civil Air Patrol and the Civil Defense Corps in monitoring home-front security during World War II.

Key Takeaways

Key Points

  • Already before entering WWII, President Roosevelt established an organization whose task was to convert industries from peacetime work to war needs, allocate scarce materials, establish priorities in the distribution of materials and services, and prohibit nonessential production. The name, character, and function of this organization was redefined a number of times, but it finally became the War Production Board.
  • On May 20, 1941 the Office of Civilian Defense (OCD) was created to coordinate state and federal measures for the protection of civilians in case of war emergency.
  • In December 1941, the Civil Air Patrol (CAP), the civilian auxiliary  of the United States Air Force, was established. It commissioned civilians to patrol (mostly the coast and borders) and engage in search and rescue missions.
  • The Civil Defense Corps organized approximately 10 million volunteers to fight fires, decontaminate following chemical weapon attacks, and provide first aid.
  • In October 1942, the CAP also launched a very successful cadet program that recruited and trained youth, with an emphasis on flight training.

Key Terms

  • Council of National Defense: A United States organization formed during World War I to coordinate resources and industry in support of the war effort, including the coordination of transportation, industrial and farm production, financial support for the war, and public morale.
  • War Production Board: An agency of the United States government that supervised war production during World War II. President Franklin D. Roosevelt established it on January 16, 1942, with Executive Order 9024.
  • Civil Air Patrol: A congressionally chartered, federally supported, non-profit corporation that serves as the official civilian auxiliary of the United States Air Force. During World War II, it recruited and trained American civilians to aid the war effort.
  • Civil Defense Corps: An organization established during World War II, under the Office of Civilian Defense. It organized approximately 10 million volunteers to fight fires, decontaminate after chemical weapon attacks, provide first aid, and other duties.

Civil Defense: Background

The idea of civil defense began to come of age, both worldwide and in the United States, during World War I, when it was usually referred to as “civilian defense.” This was the first major war that required the involvement and support of the general population. The U.S. followed the British model and the efforts were formalized with the creation of the Council of National Defense (CND) on August 29, 1916. It consisted of six cabinet members (the secretaries of agriculture, commerce, interior, labor, navy, and war) and an unpaid civilian advisory committee, whose task was to investigate and advise the president and heads of executive departments on the strategic placement of industrial goods and services for the potential and future use in times of war.

World War II

Even before the 1941 attack on Pearl Harbor, the Council of National Defense was reactivated by Franklin Delano Roosevelt. However, CND was replaced by the Office of Production Management in 1941, which was soon replaced by the War Production Board (WPB). The WPB directed conversion of industries from peacetime work to war needs, allocated scarce materials, established priorities in the distribution of materials and services, and prohibited nonessential production. It rationed such commodities as gasoline, heating oil, metals, rubber, paper and plastics. It was dissolved shortly after the defeat of Japan in 1945, and was replaced by the Civilian Production Administration in late 1945.

On May 20, 1941,  the Office of Civilian Defense (OCD) was created to coordinate state and federal measures for protection of civilians in case of war emergency. Its two branches supervised protective functions, such as blackouts and special fire protection, and “war service” functions, such as child care, health, housing, and transportation. It was originally headed by New York Mayor Fiorello La Guardia, and was also charged with elevating national morale. The First Lady Eleanor Roosevelt served as assistant director of the OCD, and was particularly engaged in promoting the volunteer effort. Under the OCD, the Civil Defense Corps (CDF) were established. By the end of 1943, the CDF organized approximately 10 million volunteers trained to fight fires, decontaminate after chemical weapon attacks, provide first aid, and other duties.

Civil Air Patrol

La Guardia also formalized the creation of Civil Air Patrol (CAP), the civilian auxiliary of the United States Air Force, with Administrative Order 9, signed on December 1, 1941 and published December 8, 1941. The order outlined the Civil Air Patrol’s organization, and named its first national commander as Major General John F. Curry.

With America’s entrance into World War II, German U-boats began to operate along the east coast. Their operations were very effective, sinking a total of 204 vessels by September 1942. The CAP’s top leaders requested that the War Department give them the authority to directly combat the U-boat threat. The request was initially opposed, for the CAP was still a young and inexperienced organization. However, with the alarming numbers of ships being sunk by the U-boats, the War Department finally agreed to give CAP a chance.

On March 5, 1942, the government gave the CAP the authority to operate a coastal patrol at two locations along the east coast: Atlantic City, New Jersey, and Rehoboth Beach, Delaware. They were given a time frame of 90 days to prove their worth. The CAP’s performance was outstanding, and before the 90 day period was over, the coastal patrol operations were authorized to expand in both duration and territory. By the end of the war, CAP pilots had flown more than 500,000 mission hours.

Under the CAP and its Coast Guard counterpart, the Coast Guard Auxiliary, civilians were trained to spot air raids, participate in search-and-rescue missions, and help with transportation. Towers were built in coastal and border towns, and spotters were trained to recognize enemy aircraft. Blackouts were practiced in every city, even those far from the coast. All exterior lighting had to be extinguished, and black-out curtains placed over windows. The main purpose was to remind people that there was a war on, and to provide activities that would engage the civil spirit of millions of people not otherwise involved in the war effort. In large part, this effort was successful, sometimes almost to a fault, such as in the plains states where many dedicated aircraft spotters took up their posts night after night watching the skies in an area of the country that no enemy aircraft of that time could possibly hope to reach.

At its height, The CAP operated 21 coastal bases in 13 states along the Eastern Seaboard and the Gulf of Mexico. Originally, the Coastal Patrol was to be unarmed and strictly reconnaissance. The air crews of the patrol aircraft were to keep in touch with their bases and notify the Army Air Forces and Navy in the area when a U-boat was sighted, and to remain in the area until relieved. This policy was reviewed, however, when the CAP encountered a turkey shoot opportunity. In May 1942, a CAP crew were flying a coastal patrol mission off Cape Canaveral when they spotted a German U-boat. The U-boat crew also spotted the aircraft, but not knowing that it was unarmed, attempted to flee. The U-boat became stuck on a sandbar, and consequently became an easy target.

In October 1942, the CAP planned a program to recruit and train youth, with an emphasis on flight training. The CAP cadets assisted with operational tasks and began indoctrination and training towards becoming licensed pilots. Cadets were not exempt from being conscripted. To become a cadet, one had to be between the ages of 15 and 17, and be sponsored by a CAP member of the same gender. The cadet program called for physical fitness, completion of the first two years of high school and satisfactory grades. It was open only to native-born American citizens of parents who had been citizens of the United States for at least ten years. These restrictions were intentionally imposed to hold down membership levels until a solid foundation could be established.

Civil Air Patrol poster produced for the Office of Civilian Defense, as part of a campaign to build interest in joining CAP during World War II. The image shows the profile of an airmen and two yellow airplanes. The text reads, "Eyes of the Home Skies. Civil Air Patrol of the U.S. Office of Civilian Defense."

Eyes of the Home Skies, 1943: Civil Air Patrol poster produced for the Office of Civilian Defense as part of a campaign to build interest in joining CAP during World War II.

Economic Conversion

During the Second World War, the U.S. government took strong measures to convert the economy to meet the demands of war.

Learning Objectives

Describe how the War Production Board and the transition to a wartime economy helped stimulate U.S. economic growth.

Key Takeaways

Key Points

  • Following the New Deal practice, the Roosevelt administration established a number of new government agencies, or expanded the role of those launched under the New Deal, in order to convert the peacetime economy to meet the requirements imposed by the war effort.
  • The War Production Board (WPB) was the main U.S. agency whose task was to regulate the production of materials during World War II in the United States.
  • By the end of 1943, two-thirds of the American economy was integrated into the war effort.
  • In response to the constant shortage of resources, the U.S. government introduced severe rationing measures.
  • The unemployment problem ended with the mobilization for war, hitting an all-time low of 700,000 in fall 1944.
  • The economic growth in response to the demands of World War II ended the Great Depression, and the United States transitioned into an unprecedented phase of prosperity.

Key Terms

  • rationing: The controlled distribution of scarce resources, goods, or services, or an artificial restriction of demand. Rationing controls the size of the allowed portion of resources distributed on a particular day or at a particular time.
  • War Production Board: An agency of the United States government that supervised war production during World War II. President Franklin D. Roosevelt established it on January 16, 1942, with Executive Order 9024.

Background

Demands imposed by the U.S. participation in World War II turned out to be the most effective measure to battle the long-lasting consequences of the Great Depression. The Roosevelt administration followed its New Deal approach and aimed to maintain significant control over the economy, although many in the private industry resisted the idea.  Government programs continued to recruit workers; however, this time the demand was fueled not by the economic crisis, but by massive war demands. Production sped up dramatically, closed factories reopened, and new ones were established, which created millions of jobs in both private and public sectors as industries adjusted to the nearly insatiable needs of the military. Two thirds of the American economy had been integrated into the war effort by the end of 1943.

Following the New Deal practice, the Roosevelt Administration established a number of new government agencies, or expanded the role of those launched under the New Deal, in order to convert the peacetime economy to meet the requirements imposed by the war effort. The Reconstruction Finance Corporation (RFC), which was originally established to provide loans to businesses, was now in control of eight wartime subsidiaries responsible for the management of critical natural resources and the production of synthetic alternatives at the time of constantly scarce supplies. The Office of Production Management (OPM) and the Supply Priorities and Allocations Board were both in charge of how natural resources were used for the war effort. The Office of Price Administration (OPA) was established within the Office for Emergency Management on August 28, 1941, in order to control prices (and thus inflation) and rents after the outbreak of World War II.

War Production Board

The most powerful of all war-time organizations whose task was to control the economy was the War Production Board (WPB), established by President Roosevelt on January 16, 1942 by executive order. Its purpose was to regulate the production of materials during World War II in the United States. The WPB converted and expanded peacetime industries to meet war needs, allocated scarce materials vital to war production, established priorities in the distribution of materials and services, and prohibited nonessential production. It rationed such commodities as gasoline, heating oil, metals, rubber, paper, and plastics.

The WPB and the nation’s factories effected a great turnaround. Military aircraft production, which totaled 6,000 in 1940, jumped to 85,000 in 1943. Factories that made silk ribbons now produced parachutes, automobile factories built tanks, typewriter companies converted to machine guns, undergarment manufacturers sewed mosquito netting, and a roller coaster manufacturer converted to the production of bomber repair platforms. The WPB ensured that each factory received the materials it needed to produce the most war goods in the shortest time. In 1942-1945, WPB supervised the production of $183 billion worth of weapons and supplies, about 40% of the world output of munitions. Britain, the USSR, and other allies produced an additional 30%, while the Axis produced only 30%. One-fourth of the U.S. output was warplanes; one-fourth was warships. Meanwhile, the civilian standard of living was about level.

The War Production Board was dissolved shortly after the defeat of Japan in 1945, and was replaced by the Civilian Production Administration in late 1945. Commercial institutions that had bought billions of dollars of bonds and other treasury paper during the war years, were estimated to be holding more than $24 billion at the war’s end.

Rationing

The greatest challenge of such massive war-related production was the permanent scarcity of resources. In response to it, the U.S. government, similarly to other states engaged in the war, introduced severe rationing measures.

Tires were the first item to be rationed by the OPA, which ordered the temporary end of sales on December 11, 1941, while it created 7,500 unpaid, volunteer, three-person tire ration boards around the country. There was a shortage of rubber for tires since the Japanese quickly conquered the rubber-producing regions of Southeast Asia. Although synthetic rubber had been invented before the war, it had been unable to compete with natural rubber commercially, so the U.S. did not have enough manufacturing capacity at the start of the war to make synthetic rubber. Throughout the war, rationing of gasoline was motivated by a desire to conserve rubber, as much as by a desire to conserve gasoline. A national speed limit of 35 miles per hour was imposed to save fuel and rubber for tires.

The WPB ordered the temporary end of all civilian automobile sales on January 1, 1942, leaving dealers with one-half million unsold cars. Automobile factories stopped manufacturing civilian models by early February 1942, and converted to producing tanks, aircraft, weapons, and other military products, with the United States government as the only customer. As of March 1, 1942, dog food could no longer be sold in tin cans, and manufacturers switched to dehydrated versions. As of April 1, 1942, anyone wishing to purchase a new toothpaste tube, then made from metal, had to turn in an empty one. By June 1942, companies also stopped manufacturing metal office furniture, radios, phonographs, refrigerators, vacuum cleaners, washing machines, and sewing machines for civilians.

Sugar was the first consumer commodity rationed, with all sales ended on April 27, 1942. Coffee was rationed nationally on November 29, 1942. By the end of 1942, ration coupons were used for nine other items. Typewriters, gasoline, bicycles, footwear, silk, nylon, fuel oil, stoves, meat, lard, shortening and food oils, cheese, butter, margarine, processed foods (canned, bottled, and frozen), dried fruits, canned milk, firewood and coal, jams, jellies, and fruit butter were rationed by November 1943. Scarce medicines, such as penicillin, were rationed by triage officers in the U.S. military during World War II.

Labor

The unemployment problem ended with the mobilization for war, hitting an all-time low of 700,000 in fall 1944. There was a growing labor shortage in war centers, with sound trucks going street by street begging for people to apply for war jobs. Greater wartime production created millions of new jobs, while the draft reduced the number of young men available for civilian jobs. So great was the demand for labor that millions of retired people, housewives, and students entered the labor force, lured by patriotism and wages. The shortage of grocery clerks caused retailers to convert from service at the counter to self-service. Before the war, most groceries, dry cleaners, drugstores, and department stores offered home delivery service. The labor shortage and gasoline and tire rationing caused most retailers to stop delivery. They found that requiring customers to buy their products in person increased sales.

Labor shortages were felt in agriculture, even though most farmers were given an exemption and few were drafted. Large numbers volunteered or moved to cities for factory jobs. At the same time, many agricultural commodities were in greater demand by the military, and for the civilian populations of allies. Production was encouraged and prices and markets were under tight federal control. Civilians were encouraged to create “victory gardens,” farms that were often started in backyards and lots. Children were encouraged to help with these farms.

Because of the unprecedented labor demands, groups that were historically excluded from the labor market, particularly African Americans and women, received access to jobs. However, even the existing circumstances did not end discrimination, especially against the workers of color.

The text at the top of the poster reads, "This store has volunteered to be an official tin salvage station for empty collapsible metal tubes." Below Uncle Sam holds up a poster that reads, "I need the tin in your empty tooth paste and shave cream tubes. Bring them in! This tin will be allocated by the War Production Board."

War Poster for Tin Salvage, Office for Emergency Management, 1941-1945.: Tin salvage station for empty collapsible metal tubes.

Financing the War

As the U.S. entered World War II, Secretary of the Treasury Henry Morgenthau began planning a national defense bond program to finance the war.

Learning Objectives

Explain how “defense bonds” worked to finance the war in the United States

Key Takeaways

Key Points

  • Although President Roosevelt favored the increase of taxes and enforced savings programs as a way to finance World War II, Secretary of the Treasury Henry Morgenthau, Jr.’s vision to establish a national defense bond program prevailed in the fall of 1940. Three series of bond notes would be introduced, of which Series E would be targeted at individuals as “defense bonds.” The War Finance Committee was placed in charge of supervising the sale of all bonds.
  • The government funded a big advertising campaign that encouraged Americans to purchase the defense bonds.
  • 85 million Americans purchased bonds over the course of the war, raising approximately $185.7 billion, which covered between 50-60% of war costs.

Key Terms

  • War Finance Committee: A federal agency in charge of supervising the sale of all war bonds during World War II.
  • war bond: Debt securities issued by a government to finance military operations and other expenditure in times of war. They also remove money from circulation, and thus help to control inflation, and are either retail bonds marketed direct to the public or wholesale bonds traded on a stock market.
  • Henry Morgenthau, Jr.,: The U.S. Secretary of the Treasury during the administration of Franklin D. Roosevelt. He played a major role in designing and financing the New Deal. To finance World War II, he initiated an elaborate system of marketing war bonds.

Background

By the summer of 1940, the victories of Nazi Germany against Poland, Denmark, Norway, Belgium, the Netherlands, and France brought urgency to possible United States involvement in World War II. Of principal concern were issues surrounding war financing. Many of President Franklin D. Roosevelt’s advisers favored a system of tax increases and enforced savings program, as advocated by British economist John Maynard Keynes. In theory, this would permit increased spending while decreasing the risk of inflation. Secretary of the Treasury Henry Morgenthau, Jr., however, preferred a voluntary loan system and began planning a national defense bond program in the fall of 1940. The intent was to unite the attractiveness of the baby bonds that had been implemented in the interwar period with the patriotic element of the Liberty Bonds from the first World War. Bonds became the main source of war financing, covering what economic historians estimate to be between 50% and 60% of war costs.

The Bond System

Morgenthau sought the aid of Peter Odegard, a political scientist specializing in propaganda, to draw up the goals for the bond program. On the advice of Odegard, the Treasury began marketing the previously successful baby bonds as “defense bonds.” Three new series of bond notes, Series E, F, and G, would be introduced, of which Series E would be targeted at individuals as “defense bonds.” Like the baby bonds, they were sold for as little as $18.75 and matured in 10 years, at which time the United States government paid the bondholder $25. Larger denominations of between $50 and $1,000 were also made available, all of which, unlike the Liberty Bonds of the first World War, were non-negotiable bonds. For those that found it difficult to purchase an entire bond at once, 10 cent savings stamps could be purchased and collected in Treasury-approved stamp albums until the recipient had accumulated enough stamps for a bond purchase. The name of the bonds was eventually changed to ” war bonds ” after the Japanese attack on Pearl Harbor on December 7, 1941, which resulted in the United States entering the war.

The War Finance Committee was placed in charge of supervising the sale of all bonds, and the War Advertising Council promoted voluntary compliance with bond buying. Popular contemporary art was used to help promote the bonds, such as the Warner Brothers theatrical cartoon, “Any Bonds Today?” The government appealed to the public through popular culture. Norman Rockwell’s painting series, “The Four Freedoms,” toured in a war bond effort that raised $132 million. Bond rallies were held throughout the country with celebrities, usually Hollywood film stars, to enhance the bond advertising effectiveness. The Music Publishers Protective Association encouraged its members to include patriotic messages on the front of their sheet music, like “Buy U.S. Bonds and Stamps.” Over the course of the war, 85 million Americans purchased bonds, totaling approximately $185.7 billion.

Series E “Defense Bonds”

The United States government marketed Series E U.S. savings bonds as war bonds from 1941 to 1980. The first Series E bond was sold to Roosevelt by Morgenthau on May 1, 1941. These were marketed first as “defense bonds,” then later as “war bonds.” Although Series E bonds are usually associated with the war bond drives of World War II, they continued to be sold until June 1980.

The Cost of the War

The budgetary expenses for the years 1941-1945 amounted to some $317 billion, of which $281 billion was directly related to the war effort; expenditures climbed from $9.6 billion in fiscal 1940 to nearly $100 billion in 1945. Of these outlays some 45% was covered by taxes and other non-borrowing sources. The deficit had to be covered by selling bonds. The Treasury sold $185.7 billion of securities (over $2.1 trillion in 2016) to finance the war. The public debt rose from $50 billion in 1940 to $260 billion in 1945.

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“Give War Bonds,” Office for Emergency Management, 1941-1945: A propaganda poster encouraging Americans to purchase war bonds from the Office for Emergency Management.

Economic Controls

During World War II, the federal government controlled the prices of goods, wages, and war-sensitive materials, like fuel and steel.

Learning Objectives

Describe the role of the Office of Price Administration, the Office of Administrator of Export Control, and the War Production Board in controlling the U.S. economy during WWII

Key Takeaways

Key Points

  • Following the New Deal practice, the Roosevelt administration established a number of new government agencies, or expanded the role of those launched under the New Deal, in order to convert the peacetime economy to meet the requirements imposed by the war effort.
  • The Office of Price Administration, established in 1941, controlled money (price controls), rents after the outbreak of World War II, and wages. It also rationed scarce supplies.
  • The War Production Board established in 1942 was the major war-time agency in charge of converting peacetime industries to meet war needs. It allocated scarce materials vital to war production, established priorities in the distribution of materials and services, and prohibited non-essential production. It also rationed scarce commodities.
  • Legislative measures, followed by the establishment of a number of successive federal agencies, were also introduced to control the export and import of essential materials.

Key Terms

  • War Production Board: A government agency established on January 16, 1942. Its purpose was to regulate the production and distribution of materials during World War II in the United States, and to convert peacetime industries to meet the demands of war.
  • Office of Price Administration: An agency established within the Office for Emergency Management of the United States government on August 28, 1941. It controlled money (price controls), rents after the outbreak of World War II, and wages, as well as rationed scarce supplies.
  • Board of Economic Warfare: A short-lived federal agency that was the successor of the Economic Defense Board; established to strengthen U.S. international economic relations and straighten Allied states through the procurement of materials.

Following the New Deal practice, the Roosevelt administration established a number of new government agencies, or expanded the role of those launched under the New Deal, in order to convert the peacetime economy to meet the requirements imposed by the war effort. Three of them, the Office of Price Administration (OPA; est. 1941), the Office of Administrator of Export Control (est. 1940; its functions later transferred to the Economic Defense Board, and in 1943 to the Office of Economic Warfare), and the War Production Board (WPB; est. 1943) were among the federal agencies in charge of controlling the economy so that the United States was able to meet the demands of World War II.

Office of Price Administration

Executive Order 8875 established the Office of Price Administration (OPA) in 1941. The functions of the OPA were originally to control money (price controls) and rents after the outbreak of World War II. It became an independent agency under the Emergency Price Control Act 1942. The OPA had the power to place ceilings on all prices except agricultural commodities, and to ration scarce supplies of other items, including tires, automobiles, shoes, nylon, sugar, gasoline, fuel oil, coffee, meats, and processed foods. At the peak, almost 90% of retail food prices were frozen. The OPA could also authorize subsidies for production of some of those commodities, and controlled wages. Most functions of the OPA were transferred to the newly established Office of Temporary Controls (OTC) by Executive Order 9809, December 12, 1946. The Financial Reporting Division was transferred to the Federal Trade Commission.

The black and white photograph shows a shelf of Firestone tires. A sign that says "Rationed" is affixed to the shelf.

Rationed tires, ca. 1942-1946: The rationing of goods became common during World War II.

War Production Board

The War Production Board (WPB) was established as a government agency on January 16, 1942 by executive order of Franklin D. Roosevelt, replacing the Supply Priorities and Allocation Board and the Office of Production Management. The WPB directed conversion and expansion of peacetime industries to meet war needs, allocated scarce materials vital to war production, established priorities in the distribution of materials and services, and prohibited non-essential production. It rationed such commodities as gasoline, heating oil, metals, rubber, paper, and plastics.

The WPB and the nation’s factories effected a great turnaround. Military aircraft production, which totaled 6,000 in 1940, jumped to 85,000 in 1943. Factories that made silk ribbons now produced parachutes, automobile factories built tanks, typewriter companies made machine guns, undergarment manufacturers sewed mosquito netting, and a roller coaster manufacturer converted to the production of bomber repair platforms. The WPB ensured that each factory received materials it needed to operate, in order to produce the most war goods in the shortest time. In 1942-1945, WPB supervised the production of $183 billion worth of weapons and supplies, about 40% of the world output of munitions. Britain, the USSR, and other Allies produced an additional 30%, while the Axis produced only 30%. One fourth of the U.S. output was warplanes; one fourth was warships. Meanwhile, the civilian standard of living was about level.

Export Control

In July 1940, the Export Control Act was passed as a measure employed to avoid scarcity of critical commodities in a likely pre-war environment, and to limit the export of materials to Imperial Japan. The act originated as a presidential proclamation forbidding the exporting of aircraft parts, chemicals, and minerals without a license, and was intended to induce Japan to curtail its occupation of the Indo-Chinese coast. The same year, the Office of Administrator of Export Control was established to administer the provisions of the act. Only a year later, its functions were transferred to the Economic Defense Board (later changed to the Board of Economic Warfare). The Board, chaired by Vice President Henry Wallace, aimed to strengthen economic international relations (through the control of imports and exports), and supported the Allied war effort through procurement of strategic resources (including arms). After a set of controversies over the Board’s authority and financing,  its functions were transferred to the newly created Office of Economic Warfare in the Office for Emergency Management in 1943.