Through the 1920s, the farmer was the “sick man” of the American economy. Each year saw more farmers going into tenantry, until by 1929 four out of 10 farmers in the nation were no longer independent operators. Each year the farmer seemed to fall further behind the city dweller in terms of relative well-being. In 1910, the income per worker on the farm had been not quite 40 percent of that of the nonfarm worker; by 1930, it was just under 30 percent. (source pg. 93 making of an economic society)

Although there were many attempts made by President Herbert Hoover to keep the economy moving again all were for naught from the Administration claimed to be responsible for the Great Depression.

It was President Franklin D. Roosevelt, won by a landslide vote against Hoover, who reopened the Banks in late March 1933. The new President’s response was immediate and vigorous: In the 3 months after Roosevelt’s inauguration, writes Arthur Schlesinger, “Congress and the country were subjected to a presidential barrage of ideas and programs unlike anything known to American history.” This was the famous Hundred Days of the New Deal—the days in which, half by design, half by accident, the

foundation was laid for a new pattern of government relationship to the private economy, a pattern that was to spell a major change in the organization of American capitalism ( source : pg. 101 making of an economic society). During his term he sent a flurry of bills and created programs that put millions of Americans back to work. Although many were unemployed still output began to rise reaching the same level as those in 1929. The big reason for this New Deal’s success was the massive federal government spending for work programs. This huge injection of dollars into the economy was certainly the cure and just what the nation needed. Just as it looked as though the Depression is finally over it plunged right back into it again. The reason being with the economy rising, the natural courses of action was to balance the budget at all costs and to tighten credit to avoid inflation, these will prove to be disastrous as the nation would experience the sharp recession of 1937-38. Although the economy was rising the major player for the recession was an unemployment rate of 12 percent, prescribed with balanced budget and tight money.

The nation was again experiencing rising unemployment and falling production but this time it was temporary. In April 1938, the Roosevelt Administration and the Federal Reserve Board hastily began to stimulate the economy rewarded by an expansion that would continue for 7 years. The outbreak in the war with Europe with America mobilizing its army in 1940 and 1941 and its eventual entry into the war in December 7, 1941 propelled the nation to full recovery. It was clear what brought the United States from the Great Depression: the massive government spending that was needed to prepare and fight World War II. The country that emerged from the war was quite different. Prosperity had replaced depression. Inflation is the number one concern.

The 1940s: World War II and Peacetime Prosperity

World War II was the main event of the 1940s especially the day the Japanese bombed Pearl Harbor until their surrender in August 1945. For the first time in its history the nation fought a war that required a total national effort.

At the peak of the war more than 12 million men and women were mobilized causing the unemployment rate to fall below 2 percent. With the majority of the population participating the war, companies would hire just about anybody. But thanks to this, the country mass produced 300,000 airplanes, over 100,000 tanks, and 88,000 warships.

Between 1939 and 1944, national output doubled. By the middle of 1942, the American economy reached full employment for the first time since 1929. During the war, 17 million new jobs were created while the economy grew. The trademark of the nation as an Industrial might proved the decisive factor in winning World War II. The Japanese and Germans were overwhelmed as the United States accounted for half the world’s manufacturing output.

In 1945, only two superpowers were left standing the United States and the Soviet Union. The cold war then developed in which billions were spent aiding the sagging economies of Western Europe and Japan and another billions for their defense, by this the Soviet Union collapsed in 1990-91.

Once the war was over, very little housing had been built and there was a preceding depressed postwar period so many veterans were overcrowded in houses and apartments. The federal government answered to this call by supplementing these veterans with affordable mortgages and new houses built in the suburbs. In 1945, little land was available so suburbanization was inevitable. Highways would be built for easy access to these suburban housings. Hence the late 1940s and 1950s were one big

construction boom. This construction boom would provide millions of jobs. By this time the automobile industry was up and running again making America the world’s leading auto exporter.

In 1944, Congress passed the GI Bill of Rights which offered veterans not only mortgages but also help with educational costs. The GI bill made college affordable and was responsible for enrollments more than doubling between 1940 and 1949.

The 1950s : The Eisenhower Years

In the early 1950s the economy was stimulated by the advent of televisions and the Korean War. General Dwight D. Eisenhower, one of the great heroes of World War II, was elected president. He made good on his promise of ending the war on Korea and ending the inflation of the Second World War. Three recessions occurred during his presidency. What was most significant during his term was how he did not undo the legacies of the New Deal like the Social Security and other regulatory reforms established. The role of the federal government as a big economic player was permanent. By the end of the decade, America was a suburban nation. By 1960, all homes had at least one set of TV.