A generation that endured the Great Depression had regained self-confidence on the battlefields and production lines of World War II. On V-J Day it was agreed there would be no retreat to the pre-war economy of sweatshop wages and unemployment and no vindictive second Versailles to plant the seeds of the next war.
For four years a system of total mobilization left little for the home front except basic needs and replacement parts. "The old 1938 Buick got us through. Soon we will be able to put it out to pasture."
With as little public ado as possible, the government had explored the reconversion choices. In wartime it had controlled everything that was produced, set the prices and determined where you could work and how much you could earn.
But now we would be in a race to restart the civilian economy.
In my V-J Day roundup in Advertising Age Aug. 19, 1945, I wrote:
"Even as the streets of this traditionally reserved national capital remained littered with the debris of a wild night's victory celebration, government war leaders today went on record with advice that the leaders of business and industry will be expected to set their own reconversion pace and tackle the problems of finding new markets for a greater volume of goods than they have ever produced before."
The report sketched the dimensions of change. Total production for war would drop from a second-quarter 1945 rate of $10.9 billion (1945 dollars) to $3.6 billion immediately. Aircraft production employment would be slashed from 1.3 million to 200,000. The metals, chemical and rubber industries from 7.9 million to 4.1 million. Shipyards from 1.1 million to 500,000.
There was immediate good news on consumer goods. Instead of the 150,000 electric refrigerators authorized for late 1945, planners predicted 500,000; the outlook for washing machines shifted from 50,000 to 500,000. Upwards of 250,000 autos had been anticipated for fourth-quarter 1945. Now 500,000 seemed likely in first-quarter 1946.
A titanic political struggle developed over the future of price controls. Economists who dominated the thinking at the Office of Price Administration wanted to retain price controls until supply and demand came into balance. Given the huge backlog of consumer demand, they expected that consumers would be exploited.
Businessmen warned Congress and the White House that they couldn't operate in the chaotic supply markets without freedom to wheel and deal. Congress was on their side. President Truman opted to gamble on total decontrol.
It proved to be a good bet. There was a brief burst of price increases. But the rapid rise in production soon bolstered the consumer's bargaining power.
Shortly before V-E Day, government leaders had begun talking about the opportunity for economic growth we would have in the postwar era.
At business meetings, government speakers drew a picture of sales opportunities beyond anything we had previously imagined. But it won't happen, they would say, unless you think big.
Our wartime leaders felt strongly that our future rested on the buying power of well-paid American workers. They were right. In the two decades of unprecedented growth that followed, the affluence of middle America added up to the world's most attractive market for big tag consumer goods.
Here's how I reported the prevailing mood on Oct. 24, 1945: "The rate at which ex-servicemen are absorbed into good jobs may decide more than anything else whether the postwar boom is to materialize. Washington planners believe the returning serviceman is potentially the biggest customer of all for a flock of major industries."
This mood translated into a spectacular gamble: the GI Bill of Rights. In today's vocabulary the GI Bill was pork barrel, enabling Congress to butter up veterans. In reality it was smart investing in our future.
The GI Bill was welfare deluxe. For the job hunting veteran it provided generous unemployment benefits.
Millions more elected to use a section of the program that paid them to go to school and upgrade their education.
In the two decades of postwar economic growth that followed, the creative contributions of the GI Bill beneficiaries repaid our investment over and over again.
The GI Bill paid other dividends. Our immediate threat was the need to deal with the job requirements of 8 million displaced war workers and 7 million returning servicemen. Millions of veterans busy with subsidized studies stayed out of the job market.
Another provision of the program offered guaranteed home mortgages at 4% with no down payment. Millions who could not qualify for conventional mortgages now could become home owners.
With the momentum of the GI Bill, home building became a bastion of domestic ac- tivity. The millions of homes purchased under the programs needed furniture and other furnishings.
We were similarily generous to our allies and defeated enemies; this too reverberated to our advantage.
On V-J Day we believed in ourselves as a nation and our ability to perform miracles when we planned big and took risks. We could see that the expanded buying power of an increasingly prosperous middle America was the key to our future.
V-J Day Plus 50 years finds us downsizing.
How different we are from the America which established its future by betting on the GI Bill!