Truman's Economic Policies
Content: What challenges did he face?
Leading America after Depression, New Deal, and World War
Fear of going back to the laissez faire governmental attitudes of 1920s
Needed to stay with Roosevelt’s policies at first, lacking a mandate to rule
End of War, fear of return to Depression motivated policies to stimulate growth
How successful was he?
Leading America after Depression, New Deal, and World War
future of New Deal liberalism
American economy war-time peace-time footing
Roosevelt’s New Deal liberalism
Federal government in charge of nation's economy during the war
Welfare of Americans
Now needed to reorient the financial system -> consumer production
September 1945, twenty-one point message
"full employment"
higher minimum wage
Fair Employment Practices Committee (or FEPC, monitored discrimination
African Americans in government agencies & defense industries)
Social Security System
National health insurance system
Building upon the New Deal.
Temporary extension of governmental economic controls.
Slow de-mobilisation Quick demobilization of the military -- a political need
(families’ desire)
o 12 million men returning to flood job market
o Cold War needed a credible armed force
o BUT families wanted them home ASAP and sent ‘No boats, no votes!’ postcards
to White House.
o Army: 12 million to 3 million from 1945-6
o Unemployment never rose above 4%
Businesses and consumer production
Convert military> civilian production.
o Peacetime – production and privatisation of government-controlled factories
Consumer goods high demand were slow to appear
Wanted to continue Office of Price Administration (wartime control of prices)
but conservative coalition disagreed. Congress ignored Truman’s attempts to veto watered
down Bill. Rents and prices rose but by 1946 economy stabilised, no need for OPA.
o 25% inflation 1945-46. Congress $6 billion tax cut.
o mid-1946, prices shot upward; price of meat -- doubled two-week period in the
summer
o government reinstituted price controls meat producers then withheld meat.
o high prices and scarcity angered consumers and voters, blamed the President.
September of 1946, Truman's popularity rating 32%.
mid-term elections of 1946, Republicans won control of both the House and
Senate. Democrats lost support mid-1946
1946 Congress blocked proposal for Council of Economic Advisors – CEA watch
economy, advise government.
Won "full employment" bill -- the Employment Act of 1946
Congress passed Employment Act – maximum employment and productivity –
requiring President to give annual report on economy BUT he had hoped for a bill for “full
employment”. STILL, allowed governmental involvement and guidance in economy.
Republicans & conservatives in Congress were against extension of FEPC,
national health insurance, and a higher minimum wage.
Public divided over social welfare state and government intervention
Truman received the blame.
Reconversion difficult
Objectives: increased production of consumer goods, full employment, higher
wages, lower prices, and peace between labour unions and industrial management.
Housing and jobs
To prevent a recession e.g. after WWI
Federal Housing Angency to provide housing BUT unable to get money from
Congress, construction companies more interested in commercial properties than homes.
Construction boom – jobs
GI Bill – 52 weeks’ unemployment relief for ex-servicemen, loans for education,
farms, housing, buisiness. 1945-55, $20 billion given to help 7.8 million veterans.
Opponents and difficulties
Democratic constituency – labour
August 1945, maintain price controls but that unions could pursue higher
wages.
1945-1946, strikes: steel, coal, auto, railroad industries, key sectors of
American economy and production consumer goods.
End the strikes and restore industrial peace: compulsory mediation and
arbitration, warned would draft striking railroad workers
Took United Mine Workers to court.
The unions backed down
Truman had damaged his relationship with an important element of the party
coalition.
Economic mobilization
o 1951, the nation's steel industry faced shut-down could not agree on new contract.
o Government mediation failed
o Truman's objectives to avert a strike, maintain steel production, and stay on good
terms with labour
o April, Truman used his presidential authority to seize the steel industry
o companies took Truman to court Supreme Court declared the seizure
unconstitutional by a 6-3 vote. Private management resumed, a 53-day strike a new
contract, another political set-back.
Conservatives
Truman's agricultural program, the "Brannan Plan," designed to aid the family
farmer by providing income support, floundered; it was replaced by continued price
supports.
o Congress did approve parts
public housing and slum-clearance bill in 1949
minimum wage increase
expansion of Social Security in 1950
electoral victory not a mandate to enact a liberal agenda.
"Fair Deal" as an opportunity to refashion the Democratic party into an alliance
without white conservative southern Democrats.
public opinion polls showed most wanted to protect the New Deal, not enlarge
it.
Underestimated congressional opposition to a larger social welfare state
strengthened by the public's lack of support.
enthusiasm was lost, after the summer of 1950 - the Korean War.
After re-election
Fair Deal
collection of policies and programs
liberals in the Democratic Party
economic controls, repeal of Taft-Hartley, an increase in the minimum wage,
expansion of the Social Security program, a housing bill, national health insurance,
development projects modeled on the New Deal's Tennessee Valley Authority
The Korean War
required economic mobilization at home
World War II experience: government intervention to keep unemployment and
inflation under control, stabilize wages and prices, and increase military-related industrial
production.
December 1950, Defense Production Act creating the Office of Defense
Mobilization.
mobilization proceeded: unemployment stayed low; inflation remained in
check, albeit for a sharp, one-time surge in the last half of 1950
hording of consumer goods subside
military production increased
Americans complained government's intervention in the economy, controls on
credit.
How effective were his policies?
Economic Growth
Severe economic slowdown.
unemployment and inflation rose during the first six months of that year
sought to balance federal budget high taxes and limited spending
gave some tax breaks to businesses.
primary concern was healthy economic growth, budget deficits as temporary
expedients.
succeeding administrations would follow repeatedly.
1940s – economy better.
1947, half world’s manufacturing output from USA.
Mid-1950s, massive economic growth.
Industry met high demand.
GI Bill, wages from war – soldiers had money to stimulate economy.
Baby boom – market for domestic products.
Korean War in 1950 – added to growth. New technology.
First few years not as successful but last years were – growth continued on.
1950s
growth, spending risen after WWII, investment in plant and equipment at $10
billion a year. Public sector – technology (television), car ownership, credit availability –
consumer boom.
Inequalities: 22% of population living below the poverty line by Eisenhower’s
succession
Labour issues and industrial disputes
Congressional support
What key issues/debates arise out of his leadership?
What motives?
International policies and the Cold War: the advantage of being the sole "superpower" whilst
Europe was struggling to recover
Accusations of Corruption
Equitable? Benefit society as a whole?
Inequalities
Leadership
Most scholars agree that the Korean War, battles over economic mobilization, McCarthyism,
and the allegations of corruption in his administration sapped his will to run for a third term.
What schools of thought are there?
Revisionist (Kolkos)
extend sphere of interest in Europe and the Far East.
personal ambition and demands of America's capitalist economy.
McCOY conventional history
Truman's handling of the economy after the war is judged to have been “impressive.
Truman lacked charisma and used the wrong body language, he had good political instincts
PEMBERTON critical
T remained faithful to the New Deal's commitment to social reform not out of ideology but
out of loyalty to the coalition that supported the Democrats
FERRELL
his championship of civil rights was an “emotional matter for him”, rather than a
sophisticated political strategy.
LEFFLER
foreign policy of the postwar an exercise in geopolitics.
Key policymakers wanted to thwart the Kremlin in any design it might have over forward bases,
critical industries and raw materials.
The United States was and wanted to remain “preponderant power”.
Wanted an international environment hospitable to interests.
promote economic reconstruction.
Truman and his advisers were always in full command of their decisions.
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